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‘Too Big To Fail’ States

Gerard N. Magliocca

Indiana University Robert H. McKinney School of Law

December 9, 2010

Connecticut Law Review, Vol. 43, No. 4, May 2011

This Symposium Essay explores the constitutional implications of a threatened default by a large state such as California. Much like the huge financial institutions that became distressed in 2008, a large state might be well be deemed too big to fail. If that kind of state sought a federal bailout, it would hold most of the cards in any negotiation because Congress lacks the power to compel a state to pay its debts. After outlining this hold-up issue, the Essay concludes by assessing some possible responses by Congress, such as invoking the Guarantee Clause or imposing future fiscal penalties under the Spending Clause.

Number of Pages in PDF File: 7

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Date posted: December 10, 2010 ; Last revised: February 15, 2012

Suggested Citation

Magliocca, Gerard N., ‘Too Big To Fail’ States (December 9, 2010). Connecticut Law Review, Vol. 43, No. 4, May 2011. Available at SSRN: http://ssrn.com/abstract=1722926

Contact Information

Gerard N. Magliocca (Contact Author)
Indiana University Robert H. McKinney School of Law ( email )
530 West New York Street
Indianapolis, IN 46202
United States
317-278-4792 (Phone)

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