Problem: Most US banks are privately owned, profit-making organizations. Although they provide a service just as many other businesses, banks differ because of their importance in the macro-economy. Policymakers have debated whether banks should be permitted to engage in other lines of business such as selling insurance or buying and selling stocks and bonds.
1. What are the risks for the macro-economy if a bank fails that does not exist for other businesses?
2. Should banks be allowed to enter other lines of business? Why or why not?