How to change too-big-to-fail ethic?
Thirty years ago, the biggest bank in Philadelphia was in deep trouble because of a bad bet on interest rates.
First Pennsylvania, then the oldest bank in the nation, had invested heavily in long-term government securities paying fixed rates of interest. When Paul Volcker, then the chairman of the Federal Reserve, raised interest rates in 1978 to fight inflation, the bank was crushed; it had to pay more to borrow than it earned on the bonds.
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