Jonathan R. Macey

Failure Is an Option: An Ersatz-Antitrust Approach to Financial Regulation

120 Yale L.J. 1368 (2011).  We distinguish the economic problems when large financial institutions (“banks”) become insolvent from the political challenges that exist before banks are distressed. These political problems arise because policymakers would like to be able to precommit while a bank is still healthy to refrain from bailing out the bank later, should it become distressed. Political theory...