As a result, TBTF was embedded in our legal framework. The growth of large institutions has distorted the framework of the financial system in ways other than just TBTF. Larger and more complex institutions have become more difficult to regulate and supervise.
In some cases, regulators did not have the resources or authority to keep up with a growing and innovative financial system, particularly during a period when some regulatory rules were being replaced with a risk-focused supervisory system. It has been very difficult for examiners to get large banks to tighten their operations, especially when the banks were generating tremendous profits.