Too small to fail?

In one of my banking classes our textbook talks about the TBTF (Too Big To Fail) syndrome. I find it quite ironic that throughout this global financial crisis we've been thrown into, many of the smaller financial institutions seem to be the strength of the industry. Is the TBTF syndrome still true? One secret of being a large financial institution is that you can take huge risks because you're too big to fail. If you hit craps and lose it all, don't worry, because you'll get bailed out. This may be true, however, throughout the past year or so several large financial institutions have been failing. Washington Mutual and CountryWide Financial are just of few of the large ones to have failed recently. These institutions weren't as lucky as AIG and some of the other large banking institutions that are planning to receive portions of the bailout plan from our government.

Is it right for our government to keep bailing these companies out? Is it right for our citizens (and our children) to have to deal with the burden of paying our government back through more taxation? It may not seem right, but it also may be essential in avoiding an even larger crisis and economic burden throughout the world. We do however, have to take some actions to eliminate these risks that these huge companies take! There has to be some kind of reform along with a new way of thinking.

Anyway, because of some of the risks these companies have taken they lead the path to a new concept. As I read in an article earlier today "If you act small and think big, you are too small to fail. You won't need a bailout because your business makes sense each and every day. You won't need a bailout because your flat organization (no matter how large it is) knows about problems long before they're too big to deal with." This is an interesting concept to think about and it seems very true in the midst of our global financial crisis. Furthermore, the media and the tech blogs glamorize businesses that act big. They write about the big checks VCs hand out and they lionize the organizations that make a splash. The untold story is in the organizations that are close to the customer, close to the product and close to each other. Acting small always pays off.