U.S. banks enjoy 'too-big-to-fail' advantage: Fed study

A landmark study by Federal Reserve economists found that large U.S. banks enjoy a "too-big-to-fail" advantage in financial markets, joining a heated debate that could influence regulators that are implementing tough new rules for Wall Street. The series of research papers, published on Tuesday by the U.S. central bank's influential New York branch, suggests the biggest banks benefited even after the financial crisis from lower funding and operating costs compared with smaller ones. Fed economists also found that the biggest banks can take bigger risks than their smaller peers. While the study did not pinpoint the reason big banks can borrow more cheaply, Wall Street critics say it is because investors believe the U.S. government would again rescue them in a panic.

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