Should Increased Regulation of Bank Risk-Taking Come from Regulators or from the Market? - Economic Quarterly, Spring 2009 - Federal Reserve Bank of Richmond
Should Increased Regulation of Bank Risk-Taking Come from Regulators or from the Market?
Should Increased Regulation of Bank Risk-Taking Come from Regulators or from the Market? - Economic Quarterly Spring 2009
Should Increased Regulation of Bank Risk-Taking Come from Regulators or from the Market? - Economic Quarterly, Spring 2009 - Federal Reserve Bank of Richmond
Article
Spring
2009
Robert L. Hetzel {robhet1}
<p>The heavy losses in bank asset portfolios do not reflect an inherent failure of markets to monitor risk adequately but rather the perverse incentives of the financial safety net to excessive risk-taking. The unsustainable rise in house prices and their subsequent sharp decline derived from the combination of a public policy to expand home ownership to unrealistic levels and from a financial safety net that encouraged excessive risk-taking by banks.</p>
/RichmondFedOrg/publications/research/economic_quarterly/2009/spring/pdf/hetzel1.pdf
Financial Markets and Institutions,Financial Regulation
<p>The heavy losses in bank asset portfolios do not reflect an inherent failure of markets to monitor risk adequately but rather the perverse incentives of the financial safety net to excessive risk-taking. The unsustainable rise in house prices and their subsequent sharp decline derived from the combination of a public policy to expand home ownership to unrealistic levels and from a financial safety net that encouraged excessive risk-taking by banks.</p>
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1
Financial Legislation
Financial Institutions
Lending
Moral Hazard
Housing
Too Big to Fail
Housing Finance Policy
<p>The heavy losses in bank asset portfolios do not reflect an inherent failure of markets to monitor risk adequately but rather the perverse incentives of the financial safety net to excessive risk-taking. The unsustainable rise in house prices and their subsequent sharp decline derived from the combination of a public policy to expand home ownership to unrealistic levels and from a financial safety net that encouraged excessive risk-taking by banks.</p>
Economic Quarterly
Spring
2009