AI-powered
podcast player
Listen to all your favourite podcasts with AI-powered features
Navigating Financial Crises and Moral Hazard
This chapter explores the complexities of government intervention in financial institutions, particularly during the Trump administration and events surrounding the 2008 financial crisis and COVID-19 pandemic. It highlights the implications of moral hazard resulting from bank bailouts, including the contrasting responses to Bear Stearns and Lehman Brothers, and critiques the regulatory mindset that favors stability over accountability. The discussion underscores the importance of allowing insolvent firms to fail to avoid creating systemic risks and emphasizes the potential long-term consequences of current financial regulations.