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Banks 'Too Big To Fail' - and They Know It

Financial Crisis Commission Testimony

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The Financial Crisis Inquiry Commission held its first hearing in Washington today; with another session scheduled for tomorrow. (Watch the hearing live here.) Today's witnesses included Goldman Sachs CEO; Lloyd Blankfein; Bank Of America CEO Brian Moynihan; Morgan Stanley Chairman John Mack; and JPMorgan Chase CEO Jamie Dimon. The afternoon portion of the hearing features several prominent banking experts.:

If there was any doubt that Wall Street thinks the government will step in to save "too big to fail" firms, Goldman Sachs CEO Lloyd Blankfein dispelled it on Wednesday morning.

In response to a question about whether the federal government would prevent one of his three counterparts at today's hearing -- Bank of America, JPMorgan Chase and Morgan Stanley -- from failing, Blankfein essentially said that the government would in fact step in.

"I think tomorrow in the context of this environment, at some level the government would intervene." "Because of the fragility of the system," Blankfein said, the government would be forced to step in.

In other words, 'too big to fail' is real. And Wall Street knows it.

Blankfein qualified his answer by stating that perhaps the government wouldn't have stepped in a year and a half ago, nor would they perhaps step in a year from now.

Watch clips and read updates here.

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