When President Obama signed the Dodd-Frank Act in 2010, he said it would cure the problem of too-big-to-fail banks by setting “new rules to make clear that no firm is somehow protected” from failure. “In the end,” he said, “our financial system only works—our market is only free—when there are clear rules and basic safeguards that prevent abuse, that check excess, that ensure that it is more profitable to play by the rules than to game the system.”
Seven years later, those reforms have achieved far less than he promised. That’s especially true of the framework for designating insurance companies and other non-banks as “systemically important financial institutions,” or SIFIs.
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