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Powell’s Keynote Speech on Ending “Too Big to Fail”

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Powell’s Keynote Speech on Ending Too Big to Fail

It is reported that the Chairman of the Federal Reserve, Powell, delivered an Ending “Too Big to Fail” keynote speech at the 2013 meeting of the International Bankers Association in Washington. In his first speech as a member of the Federal Reserve, he discussed how to deal with bank runs. In January 1991, there was the third largest bank failure in the history of the United States. The financial system and the overall economy were under great pressure. 45 banks were closed and 300000 accounts were affected. At that time, the problem was that either the Federal Deposit Insurance Corporation of the United States protected all bank depositors without considering the deposit insurance limit, or it might face a more severe panic run. At last, the Federal Reserve decided to ignore the maximum insurance amount and protect the full amount in each account.

Powell proposed to protect the full amount of each account in the collapse of the third largest bank in the history of the United States ten years ago

Analysis based on this information:


In 2013, the Chairman of the Federal Reserve, Powell, gave a keynote speech at the International Bankers Association meeting in Washington where he spoke about ending “too big to fail”. He talked about how to deal with bank runs and took into account the third largest bank failure in the history of the United States which occurred in January 1991 – an event which put the financial system and the overall economy under great pressure, closing 45 banks and affecting 300,000 accounts.

During the 1991 crisis, the problem was that either the Federal Deposit Insurance Corporation of the United States protected all bank depositors without considering the deposit insurance limit, or there would be a more severe panic run. It was a dilemma for the Federal Reserve, but in the end, they decided to ignore the maximum insurance amount and protect the full amount in each account.

Powell emphasized that such crises could be avoided if the banks were made to understand the importance of risk management and accountability while implementing the necessary measures. He further discussed that the Federal Reserve should work towards reducing the size and complexity of the big banks so that “too big to fail” becomes a thing of the past.

In conclusion, Powell’s keynote speech was a wake-up call to the banking sector, to take more accountability and implement measures to prevent bank runs from happening. The 1991 banking crisis was a lesson learned, prompting the Federal Reserve to take measures to protect depositors. However, the need for banks to take more responsibility and be proactive in preventing such crises remains. The Federal Reserve must also continue to reduce the size and complexity of the big banks, thus reducing risks that may arise in future crises.

To sum up, Powell’s speech is an important reminder of the crucial role played by the Federal Reserve in ensuring that the American banking sector is responsive, well-regulated, and prepared for any future crises. It serves as a reminder that prevention is always better than cure when it comes to managing financial risks, and that the banking sector needs to work together in order to achieve a safer and more stable banking system.

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