New York Fed study finds TBTF banks take on more risk

Banks that can rely on government support make riskier loans

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An attempt to measure the moral hazard involved in being ‘too big to fail' (TBTF) has found banks that can probably rely on government support do indeed take on more risk.

A new paper from the New York Fed – part of a series on large, complex banks launched this week – uses a device invented by Fitch Ratings called the support rating floor (SRF), which isolates potential sovereign support from other sources of external support, as a measure of likely government support.

The paper: Do "too-big-to

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