The US government should formulate new policies to avoid taxpayer-funded bail-outs of large institutions, Jamie Dimon, chief executive of JPMorgan, and Sheila Bair, Federal Deposit Insurance Corporation chairman, said on Friday at the Clinton Global Initiative summit.

”It would be a very bad long-term policy error to have banks that are too big to fail,” Mr Dimon told the audience at a panel on finance. ”If you don’t facilitate failure, you are going to subsidise weak firms,” he said.