Busted: Bankers and The Global Economy

November 28, 2007

Fed Seeks Avoiding Moral Hazard

Filed under: banking, federal reserve, government, money — Tags: , , , , , , — digitaleconomy @ 3:17 pm

The Fed reminds all that will listen that they don’t cover the increasing losses in the market place and that these losses should be borne by the market and borrowers. Too bad the Bush Administration hasn’t felt the same way by allowing the reckless conduct of the finance and mortgage industry. Ultimately, the citizens of the U.S. pay, not the profit takers. The Fed is padded at 110% for every loan they make. The U.S. banks and finance industry haven’t been so wise. Their short-sightedness and speculative nature has come back to haunt them.

“Central banks seek to promote financial stability while avoiding the creation of moral hazard. People should bear the consequences of their decisions about lending, borrowing, and managing their portfolios, both when those decisions turn out to be wise and when they turn out to be ill advised.”
~ Fed Vice Chairman Donald L. Kohn

Financial Markets and Central Banking, November 28, 2007


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