Macro perspectives on the Capital Markets, Economy, Geopolitics, Technology and Digital Media

Visit Big Picture

Lacker: The Fed Risks Moral Hazard

Posted on June 05, 2008

From today's WSJ, we see this critique about the Bear Stearns Bailout from an insider: Federal Reserve Bank of Richmond Jeffrey Lacker's, made in aspeech in London on Thursday. Lacker, along with former Fed Chairman Paul Volcker and others, haveraised concerns about the Fed's rescue of theBear Stearns. The WSJ described it as a striking insider's critique. The danger is that the effect of recent credit extension on theincentives of financial market participants might induce greater risktaking, which in turn could giverise to more frequent crises, in which case it might be difficult toresi...

Original article link


central bank , economic models , economics , fed , housing , inflation , interest rates , online , system , the fed