“Too big to fail” refers to an entity so important to a financial system that a government would not allow it to go bankrupt due to the seriousness of the economic repercussions. For example, the 2008 Emergency Economic Stabilization Act provided bailout funds for Wall Street banks and U.S. automakers, the financial health of which were considered essential to the United States economy.
[Last updated in August of 2021 by the Wex Definitions Team]
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