“Too Big to Fail” was first known during a 1984 Congressional hearing at which Congressman Stewart McKinney discussed the intervention of the Federal Deposit Insurance Corporation with Continental IIIinois. The idea is that some financial institutions are so large that if one of them fails, it will have an unexpectedly disastrous effect on the economy. As we all know, the 2008 financial crisis brought the “too big to fail” issue to the height of controversy. Banks, insurance companies, and automobile manufacturers are part of the large business sector. They make profits by creating and selling complex derivatives and trading loans, commodities and stocks. When the large economic environment is prosperous, these large companies gain a competitive advantage and try to take on small companies to become larger. If their investments fail, their customers but also taxpayers will be forced to take the risk of the collapse of the global economy. Kimberly Amadeo describes an example of how the too-big-to-fail problem applied to American International Group (AIG), one of the world's largest insurance companies. Amadeo reports: “Most of its business was in traditional insurance products. When she got into credit default swaps, she got into trouble. These swaps insured assets that backed corporate debt and mortgages. AIG was too big to fail because if AIG went bankrupt it would bankrupt many of the financial institutions that purchased these swaps. (Amadeo) AIG was ultimately saved thanks to an $85 billion loan over two years from the Federal Reserve. This prevented AIG from putting further pressure on the financial sector. “In exchange, the government received 79.9% of AIG's capital, the right to replace the management and... paper... financial institutions, regardless of their objectives. Otherwise, the AIG problem will once again be brought to the forefront. Works Cited1) Amadeo, K. (nd). Too big to fail. Retrieved from http://useconomy.about.com/od/businesses/p/Too-Big-to-Fail.htm2) Puzzanghera, J. (September 17, 2013). Several banks considered too big to fail are even bigger. Los Angeles Times. Internet. March 1, 20143) Dudley, WC (November 7, 2013). An end too big to fail. Federal Reserve Bank of New York. Internet. March 01, 20144) Dodd Frank Law. (nd). U.S. Commodity Futures Trading Commission. Web March 1, 2014 Retrieved from http://www.cftc.gov/lawregulation/doddfrankact/index.htm5) Bordelon, B. (July 23, 2013). Wall Street's Dodd-Frank Act Still Criticized Three Years Later Retrieved from http://dailycaller.com/2013/07/23/dodd-frank-wall-street-law-still-criticized-three-years-later/