US

Big Banks

Question A:

The U.S government should make further efforts to shrink the size of the country's largest banks — such as by capping the size of their liabilities or penalizing large banks more heavily through taxes or other means — because the existing regulations do not require the biggest banks to internalize enough of the "too-big-to-fail" risks that they pose.

Responses weighted by each expert's confidence

Question B:

The economic benefits to the U.S. of having a handful of banks with balance sheets greater than $1 trillion are small.

Responses weighted by each expert's confidence

Question A Participant Responses

Participant University Vote Confidence Bio/Vote History
Acemoglu
Daron Acemoglu
MIT
Strongly Agree
8
Bio/Vote History
Alesina
Alberto Alesina
Harvard Did Not Answer Bio/Vote History
Altonji
Joseph Altonji
Yale
Agree
3
Bio/Vote History
Auerbach
Alan Auerbach
Berkeley
Uncertain
3
Bio/Vote History
Autor
David Autor
MIT
No Opinion
Bio/Vote History
Baicker
Katherine Baicker
University of Chicago
No Opinion
Bio/Vote History
Bertrand
Marianne Bertrand
Chicago
Agree
2
Bio/Vote History
Chetty
Raj Chetty
Harvard
No Opinion
Bio/Vote History
Chevalier
Judith Chevalier
Yale
Agree
3
Bio/Vote History
Currie
Janet Currie
Princeton
Agree
2
Bio/Vote History
Cutler
David Cutler
Harvard
Agree
6
Bio/Vote History
They should pay more for more implicit protection.
Deaton
Angus Deaton
Princeton
Strongly Agree
7
Bio/Vote History
Duffie
Darrell Duffie
Stanford
Disagree
8
Bio/Vote History
I am open minded about a size cap, but before taking this action, I think more research should be done on unintended consequences.
Edlin
Aaron Edlin
Berkeley
Agree
7
Bio/Vote History
Eichengreen
Barry Eichengreen
Berkeley
Agree
8
Bio/Vote History
Fair
Ray Fair
Yale
Uncertain
5
Bio/Vote History
Probably better to stiffen regulations.
Goldberg
Pinelopi Goldberg
Yale
No Opinion
Bio/Vote History
Goldin
Claudia Goldin
Harvard
Agree
2
Bio/Vote History
Goolsbee
Austan Goolsbee
Chicago
Uncertain
7
Bio/Vote History
it wasn't really size that made them dangerous. it was interconnection. derivatives, resolution, and consolidated supervisor > deposit size
Greenstone
Michael Greenstone
University of Chicago
Agree
3
Bio/Vote History
Hard to disagree in principle; we need more information on how to design such rules practically (or at least i need to know more).
Hall
Robert Hall
Stanford
Disagree
8
Bio/Vote History
Limiting assets is largely ineffective because banks can take similar risks and earn similar returns using swaps rather than holding assets.
Holmström
Bengt Holmström
MIT
Agree
2
Bio/Vote History
Very unclear how far to go. Was too big to fail the problem in Canada? In Europe? Expansion triggered by regulatory change the big problem.
Hoxby
Caroline Hoxby
Stanford Did Not Answer Bio/Vote History
Judd
Kenneth Judd
Stanford
Disagree
6
Bio/Vote History
Banks face the same market incentives, and will make similar investments. Penalizing size does not help the solvency of the banking system.
Kashyap
Anil Kashyap
Chicago Booth
Uncertain
7
Bio/Vote History
Many ways to use derivatives and other regulatory loopholes to avoid these penalties. So we could make things less safe. Details matter.
Klenow
Pete Klenow
Stanford
Uncertain
8
Bio/Vote History
Depends on the capital requirements imposed on them.
-see background information here
Lazear
Edward Lazear
Stanford Did Not Answer Bio/Vote History
Levin
Jonathan Levin
Stanford
Uncertain
3
Bio/Vote History
I think my view on this would depend on exactly what steps were being proposed.
Maskin
Eric Maskin
Harvard
Disagree
6
Bio/Vote History
I think the dangers of "too big to fail" have been exaggerated. Small banks would have to be bailed too in a financial crash.
Nordhaus
William Nordhaus
Yale
Strongly Agree
8
Bio/Vote History
Obstfeld
Maurice Obstfeld
Berkeley
Agree
7
Bio/Vote History
Saez
Emmanuel Saez
Berkeley Did Not Answer Bio/Vote History
Scheinkman
José Scheinkman
Columbia University
Agree
7
Bio/Vote History
Schmalensee
Richard Schmalensee
MIT
Agree
3
Bio/Vote History
Shin
Hyun Song Shin
Princeton
Strongly Agree
9
Bio/Vote History
Stokey
Nancy Stokey
University of Chicago
Agree
7
Bio/Vote History
Thaler
Richard Thaler
Chicago Booth
Agree
5
Bio/Vote History
Seems right. Like the tax idea at rate that increases above some threshold.
Udry
Christopher Udry
Northwestern
Agree
6
Bio/Vote History
Zingales
Luigi Zingales
Chicago Booth
Strongly Agree
8
Bio/Vote History

Question B Participant Responses

Participant University Vote Confidence Bio/Vote History
Acemoglu
Daron Acemoglu
MIT
Agree
8
Bio/Vote History
Alesina
Alberto Alesina
Harvard Did Not Answer Bio/Vote History
Altonji
Joseph Altonji
Yale
Agree
3
Bio/Vote History
Auerbach
Alan Auerbach
Berkeley
Uncertain
3
Bio/Vote History
Autor
David Autor
MIT
No Opinion
Bio/Vote History
Baicker
Katherine Baicker
University of Chicago
No Opinion
Bio/Vote History
Bertrand
Marianne Bertrand
Chicago
Agree
2
Bio/Vote History
Chetty
Raj Chetty
Harvard
No Opinion
Bio/Vote History
Chevalier
Judith Chevalier
Yale
Agree
3
Bio/Vote History
Currie
Janet Currie
Princeton
Agree
6
Bio/Vote History
Cutler
David Cutler
Harvard
Uncertain
1
Bio/Vote History
Deaton
Angus Deaton
Princeton
Strongly Agree
7
Bio/Vote History
Duffie
Darrell Duffie
Stanford
Disagree
8
Bio/Vote History
The costs, such as "too big to fail" are clear, and changing. The benefits, including easier intermediation of large deals, are non trivial.
Edlin
Aaron Edlin
Berkeley
Agree
1
Bio/Vote History
small relative to the costs anyway
Eichengreen
Barry Eichengreen
Berkeley
Agree
8
Bio/Vote History
Fair
Ray Fair
Yale
Agree
5
Bio/Vote History
Goldberg
Pinelopi Goldberg
Yale
No Opinion
Bio/Vote History
Goldin
Claudia Goldin
Harvard
Uncertain
2
Bio/Vote History
Goolsbee
Austan Goolsbee
Chicago
Agree
9
Bio/Vote History
Greenstone
Michael Greenstone
University of Chicago
Uncertain
2
Bio/Vote History
Hall
Robert Hall
Stanford
Agree
7
Bio/Vote History
Any returns to scale are likely exhausted at smaller scale. But we should not measure size by assets, but by exposure.
Holmström
Bengt Holmström
MIT
Agree
4
Bio/Vote History
Scope (geographic as well as product) may be the bigger issue. Subsidizing risky investment activities with subsidized deposits problematic
Hoxby
Caroline Hoxby
Stanford Did Not Answer Bio/Vote History
Judd
Kenneth Judd
Stanford
Disagree
7
Bio/Vote History
If size helps a bank provide significantly better service to customers then the economy enjoys significant benefits.
Kashyap
Anil Kashyap
Chicago Booth
Agree
1
Bio/Vote History
US firms are big in all industries and balance sheet size is an imperfect measure. But evidence on scale and scope efficiences is weak.
Klenow
Pete Klenow
Stanford
Uncertain
3
Bio/Vote History
Presume there are some economies of scale, but favor higher capital requirements on them.
-see background information here
Lazear
Edward Lazear
Stanford Did Not Answer Bio/Vote History
Levin
Jonathan Levin
Stanford
Agree
1
Bio/Vote History
Don't feel very informed on this, but not obvious why a few banks going from $500 bn to $1+ tr would create large aggregate benefits.
Maskin
Eric Maskin
Harvard
Agree
7
Bio/Vote History
Nordhaus
William Nordhaus
Yale
Agree
8
Bio/Vote History
Obstfeld
Maurice Obstfeld
Berkeley
Agree
6
Bio/Vote History
Saez
Emmanuel Saez
Berkeley Did Not Answer Bio/Vote History
Scheinkman
José Scheinkman
Columbia University
Agree
7
Bio/Vote History
Schmalensee
Richard Schmalensee
MIT
Agree
3
Bio/Vote History
Shin
Hyun Song Shin
Princeton
Strongly Agree
9
Bio/Vote History
Stokey
Nancy Stokey
University of Chicago
Strongly Agree
8
Bio/Vote History
Thaler
Richard Thaler
Chicago Booth
Agree
3
Bio/Vote History
Udry
Christopher Udry
Northwestern
Strongly Agree
5
Bio/Vote History
Zingales
Luigi Zingales
Chicago Booth
Uncertain
4
Bio/Vote History