Treasury's Miller Comments on Funding Advantages

Treasury Under Secretary Mary John Miller addressed the extent to which a perception that firms are “too big to fail” creates advantages for large financial firms.

“The evidence is mixed,” she said, noting that large companies’ liquidity, investor base, and more diverse sources of funding provide a funding edge. “In other words,” she explained, “funding advantages that companies enjoy may be a function of these factors rather than market perceptions of the probability that they would receive government support.”

Miller reviewed the many Dodd-Frank provisions that are intended to mitigate systemic risk posed by large firms. “To the extent the largest bank holding companies enjoy any cost advantage based on a perceived too-big-to-fail status, these efforts should help wring it the rest of the way out of the market,” she said.

Read the speech.