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If I could place wagers and know that someone else would cover my loses… well I might be inclined to make a lot of risky wagers. If I make money, great, if I l
by treeman79 5y ago
If I could place wagers and know that someone else would cover my loses… well I might be inclined to make a lot of risky wagers.
If I make money, great, if I lose, it’s someone else’s problem.
When government provides too cozy a safety net it encourages risky lending.
Federal flood insurance is another fun topic related to this.
- PaulDavisThe1st 5y agoI'm not arguing the government support for the banking industry is a good thing or the right thing (though there are some arguments to be made in support of it). I am saying that pulling that support during a banking crisis will generally be a disaster for the rest of us. We need to change the support for the banking industry but in a manner that doesn't screw the rest of us over with side effects.
- treeman79 5y agoMaybe so. Not repeating the same mistakes again is more of where I was going.
- geoduck14 5y ago>If I could place wagers and know that someone else would cover my loses… well I might be inclined to make a lot of risky wagers. If I make money, great, if I lose, it’s someone else’s problem. You should know, in the fallout of that Recession, LOTS of banks lost. There were plenty of regulations on lending and capital restrictions. This forced small banks to be sold and consolidate into big banks. There were plenty of big banks who wanted to expand but couldn't because they couldn't meet the regulatory pressures. There were plenty of executives who lost their jobs. Lots of banks lost.