Systemic Risk (Too Big to Fail) Explained in One Minute

You've probably come across the term "too big to fail" quite a bit after the Great Recession, a term used to describe companies which pose a systemic risk and as such, receive preferential treatment from the government.

Huge companies such as AIG and General Motors were considered too big to fail and ended up being rescued (bailed out). Who paid for it? Well, everyone else.

One important question arises: aren't institutions which receive preferential treatment due to posing a systemic risk or being too big to fail in a moral hazard situations?

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