Question

One of the concerns about the Orderly Liquidation Authority is that it would legitimize federal bailouts of large financial entities and thus increase the ________ problem.

a. too-big-to-fail
b. regulatory forbearance
c. lemons
d. fiduciary

Answer 1

Answer: Option (A)

Step-by-step explanation:

One of main interest in this particular case about Orderly Liquidation Authority tends to be that under this it might be able to legitimize the federal bailouts of the big financial corporation and thus tends to increase the too-big-to-fail problem. This theory mostly asserts that some organizations, especially the financial institutions, become so large and also interconnected such that any critical step or failure could be disastrous for the whole economic system.