Simon Johnson, Columnist

Celebrations of Too Big to Fail’s Demise Are Premature

December 8, 2013 at 11:00 PM UTC

Simon Johnson is a professor of entrepreneurship at the Massachusetts Institute of Technology's Sloan School of Management. He is co-author of "Jump-Starting America: How Breakthrough Science Can Revive Economic Growth and the American Dream."

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In a major speech last week, Treasury Secretary Jack Lew argued that we need to keep pushing forward with financial reform. He made some encouraging points about the need to reduce systemic risks arising from money-market mutual funds and for appropriate funding levels at the Securities and Exchange Commission and the Commodity Futures Trading Commission, and he spoke clearly about the need for accountability of regulators and of bank executives. But a huge misconception in his remarks threatens to swamp everything.

Lew argued that the problem of “too-big-to-fail” banks is well on its way to being fixed.