On Friday, the Treasury Department released a report on Financial Stability Oversight Council (FSOC) designations. This report could have addressed the problem underlying FSOC’s designation authority: the fact that it makes explicit which financial institutions are “too big to fail,” paving the way for more bailouts of…
So far, throughout this primer, I've claimed that central banks have one overarching task to perform: their job, I said, is to "regulate the overall availability of liquid assets, and through it the general course of spending, prices, and employment, in the economies they oversee." I've also…
[A well-known consequence of the Fed's rescue efforts consists of the "moral hazard" they pose–that is, their tendency to encourage extra risk-taking by persons who suppose that they, too, will be rescued if their wagers don't pay. Yet one particularly dangerous sort of moral hazard hasn't gotten…
For all the ink spilled on TARP — the bailout package authorizing the Treasury to purchase or insure up to $700 billion of “troubled assets” during the financial crisis — that program is dwarfed by another market intervention that occurred around the same time. In fact, the Government…