For the economy to grow, we need banks to accept the risk of lending, but we also need them to take the right amount of risk. Too little, and no one can borrow. Too much, and the system blows up. The rub: figuring out what that right amount is. Doing so has proven extremely difficult, even as the increasingly necessary role that banks perform has made the largest among them too big to fail. […] There is clearly an acceptable level of risk, one that enables innovation and progress but does not bring the system crashing down. The problem is that we don’t know what it is.
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