Even after the big bailout, here is the problem, according to Stiglitz:
And part of all this is because, contrary to the dogma (and it is a dogma), markets do not function perfectly:
Information imperfection has always been Stiglitz’s specialty, so, it is not surprising that he would see that as one of the main obstacles to competition. And of course, "too big to fail" institutions are both a product and a cause of lack of competition: monumental profits in good years, massive public bailout if they lose = major incentive to make risky investments.
And while we’re on the topic of incentives:
Let me emphasize this:
"Markets only work well when private rewards are aligned with social returns."