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Is it not also a moral hazard to lend unceasingly knowing that you'll destroy the economy before taking a hit on the bad loans you've issued?
by dpark 10y ago
Is it not also a moral hazard to lend unceasingly knowing that you'll destroy the economy before taking a hit on the bad loans you've issued?
- deleted 10y ago[deleted]
- gozur88 10y agoI don't think so. Getting companies to lend to students was the whole point of the program. Normally you'd use the term to describe unwanted side effects.
- dpark 10y agoThe term describes the situation in which the cost of one party's risks are born by another party. Whether it's "unwanted" doesn't actually seem that relevant. If foolish incentives create a moral hazard, the moral hazard still exists regardless of the intent behind the incentives.