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Now How Large Is the Safety Net?, No. 10-06

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Now How Large Is the Safety Net?, No. 10-06

DATE: June 2010

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ABSTRACT: According to estimates done by researchers at the Richmond Fed, the federal financial safety net covered $25 trillion in liabilities, or 58 percent of all financial liabilities, at the end of 2008. Such expansion of the safety net has weakened market discipline and contributed to instability in the financial sector. Instead of attempting to address the "too big to fail" problem by breaking up large firms, for instance, policymakers ought to focus on credibly scaling back the safety net and making its boundaries transparent.

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Lacker, Jeffrey Malcolm , Weinberg, John A. and Federal Reserve Bank of Richmond. "Now How Large Is the Safety Net?, No. 10-06," Economic Brief (June 2010). https://fraser.stlouisfed.org/title/6034/item/583877, accessed on June 7, 2023.

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