Regulatory safety net fueled risk taking, Fed official says

05/11/2009 | Reuters

The U.S. government's policies protecting the financial industry should be abandoned because they encouraged executives to take on excessive risk, in effect causing the financial crisis, said Jeffrey Lacker, president of the Federal Reserve Bank of Richmond in Virginia. "While deployment of the financial safety net is often viewed as an essential response to the financial crisis, I believe we need to give serious thought to the extent to which the safety net was actually a significant cause of the crisis," he said.

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