The Obama administration constantly is attempting to undertake measures to prevent future financial meltdowns. It has what it feels are the experts in their attempt to regulate whatever is required.
However, those who are suggesting remedies are bound to fail. All they will accomplish is the message that they are doing something. In that respect they are simply doing what is expected politically. But financially, they are making a mess of things.
By creating what is supposed to be super regulation, all they are setting up are moral hazards. They give investors ill-conceived confidence that markets are being well supervised and secure, when they are not. So investors take bigger risks.
Or regulators give investors the impression the latter will be bailed out if the financial system runs into a debacle. The ever-bigger-risk cycle thus continues.
Moral hazards are what helped the recent financial meltdown occur, what with institutions “too big to fail” and so-called “bailouts” that did not really work as promised.
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