“The first step to restoring the robust financial markets that can support global capitalism is to reassert the market’s ability to discipline itself without endangering the economy. Through its too-big-to-fail  policy, expanded over the quarter of  a century after Continental Illinois, Washington’s leaders, from Presidents Reagan to Clinton, unwittingly supported financial recklessness even as markets warned against it. The predictable results was more recklessness.”

“Bad companies, including big, bad financial companies, must be allowed to fail, so that their bad ideas can have a chance of dying with them. This principle is the cornerstone of assuring healthy financial markets. Unless Washington credibly repudiates its too-big-to-fail  policy, any other worthy regulations it enacts won’t matter. The lack of market discipline that the doctrine promotes will guarantee that big financial firms continue to have cheap money and the motive to find their way around such rules.”

From After the Fall:  Saving Capitalism from Wall Street- and Washington by Nicloe Gelinas