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The moral hazard is the FDIC, which arguably helped perpetuate the crisis. Banks are insured by the fed, lender of last resort, and individual accounts are insu
by thisIsNotMikey 12y ago
The moral hazard is the FDIC, which arguably helped perpetuate the crisis. Banks are insured by the fed, lender of last resort, and individual accounts are insured by FDIC. Insurance, or assurance in the case of the FDA, is the moral hazard which causes risky behavior.
- hueving 12y agoNope. The FDIC made sure they didn't do the crap they did with depositor money. It's the reason the FDIC insurance wasnt massively triggered during the crisis. The accounts that got screwed were investment accounts which were not insured by the FDIC.
- thisIsNotMikey 12y agoMoral hazard is an objective term. From the FDIC website, https://www.fdic.gov/deposit/deposits/international/guidance/guidance/moralhazard.pdf https://www.fdic.gov/deposit/deposits/international/guidance... All you have to do is read the first sentence. And "The FDIC made sure they didn't do the crap they did" is nonsensical. Not to mention, I never once referred to the economic crisis.
- hueving 12y agoMaybe you didn't follow the economic crisis then? One of the key differences between it and the great depression was the fact that depositor money was not at risk this time around thanks to the FDIC and the regulations surrounding it. There weren't wide spread bank runs wiping out savings accounts that are supposed to be risk free.