What to do with financial instuitions that are too big to fail? Simply make them smaller!

Some suggestions from the US include having an upper size limit for companies or establishing insurance to protect the innocent.

 Another way is to encourage them to limit themselves: rather than forbidding companies above a certain size directly, just transfer the risk to those running them. A straightforward way to do this would be to remove limited liability from companies above a certain size. That should focus the minds of directors and shareholders rather more clearly on risk. And it would also remove a large market distortion.Another way is to encourage them to limit themselves: rather than forbidding companies above a certain size directly, just transfer the risk to those running them. A straightforward way to do this would be to remove limited liability from companies above a certain size. That should focus the minds of directors and shareholders rather more clearly on risk. And it would also remove a large market distortion.

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