How Financial Oversight Failed & What it May Portend for the Future of Regulation
This paper analyzes the role that well-intentioned policies contributed to the crisis and increased its severity. It also examines the principal-agent problems in the public sector that enabled many of the principal-agent problems in the private sector often blamed for the crisis. The legacy of the crisis is a massive series of bailouts by public authorities in Europe and the United States that risked the equivalent of nearly one-fifth of world GDP in taxpayer funds. This moral hazard will lead to deeper and more frequent crises unless countered by a new approach to regulation that places greater emphasis on market discipline by creditors and counterparties. Copyright International Atlantic Economic Society 2010
Volume (Year): 38 (2010)
Issue (Month): 3 (September)
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