Why Large Bank Failures Are So Messy and What to Do about It?
If the Lehman Brothers failure proved anything, it was that large, complex bank failures are messy; they destroy value and can destabilize financial markets.
Resolution of Failed Banks
During the recent crisis, some of the largest and most prominent financial institutions failed or nearly failed, requiring extraordinary intervention from regulators, such as extended access to lender-of-last-resort facilities, debt and deposit guarantees, and injection of capital to mitigate systemic risk.