The U.S. economy could face a similar financial crisis to the one it is emerging from now if the government does not tackle the problem of some banks' remaining "too big to fail," Simon Johnson, an economist at the Massachusetts Institute of Technology, said Monday at the American Economic Association.
The crisis has only exacerbated the problem because of the resulting financial sector consolidation, Johnson said.
"Goldman Sachs has become the world's largest hedge fund underwritten by the U.S. government," the MIT economist said. The other five companies he mentioned as posing system risks to the economy are Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., Morgan Stanley and Wells Fargo & Co.
It will be harder to deal with any new crisis because the Federal Reserve Board has likely exhausted its ammunition to counter a financial meltdown after it cut rates close to zero and took other emergency lending steps, Johnson warned.