Too big to fail,
Definition of Too big to fail:
(of a financial organization or other business) so important to the economy of a country that a government or central bank must take measures to prevent it from ceasing to trade or going bankrupt.
Idea that certain businesses are so important to the nation, that it would be disastrous if they were allowed to fail. This term is often applied to some of the nations largest banks, because if these banks were to fail, it could cause serious problems for the economy. By declaring a company too big to fail, however, it means that the government might be tempted to step in if this company gets into a bad situation, either due to problems within the company or problems from outside the company. While government bailouts or intervention might help the company survive, some opponents think that this is counterproductive, and simply helping a company that maybe should be allowed to fail. This concept was integral to the financial crisis of the late 2000s.
Perhaps the most vivid recent example of "too big to fail" is the bailout of Wall Street banks and other financial institutions during the global financial crisis. Following the collapse of Lehman Brothers, Congress passed the Emergency Economic Stabilization Act (EESA) in October 2008. It included the $700 billion Troubled Asset Relief Program (TARP), which authorized the government to purchase distressed assets to stabilize the financial system.
"Too big to fail" describes a business or business sector deemed to be so deeply ingrained in a financial system or economy that its failure would be disastrous to the economy. Therefore, the government will consider bailing out the business or even an entire sector—such as Wall Street banks or U.S. carmakers—to prevent economic disaster.
How to use Too big to fail in a sentence?
- "Too big to fail" describes a business or sector whose collapse would cause catastrophic damage to the economy.
- The Occupy Wall Street movement was considered too big to fail , because it represented such a large swath of the American population.
- During the economic crisis of the 2008, the US government intervened in the fate of companies such as AIG because such a company was too big to fail and if it did the outcome would be unprecedented and cataclysmic.
- One example of such intervention was the Emergency Economic Stabilization Act of 2008, which included the $700 billion Troubled Asset Relief Program (TARP). .
- The government will often intervene in situations where failure poses a grave risk to the economy.
- Theodore Roosevelt used the phrase Too Big To Fail to promote big businesses, but in the modern world that is an irrelevant saying, as any company can fail at any time.
- He caused a stir earlier this month when he said that no company was too big to fail.
Meaning of Too big to fail & Too big to fail Definition