Stimulus a Moral Hazard

Campus Report ^ | January 29, 2009 | Heather Latham

[bs9021]

Stimulus a Moral Hazard

by: Heather Latham, January 29, 2009

Still in the shadows of an already-in-progress bailout plan and a yet-to-be-passed stimulus package, Congress seriously considers what to do to protect the fragile economy and help it grow again. In hopes of finding an umbrella under which to wait out the storm, the U.S. Senate Committee on Homeland Security and Governmental Affairs, led by Chairman Joseph Lieberman (I-Conn.), invited three witnesses to a hearing on the financial crisis.

The first witness was Gene Dodaro, the Acting Comptroller General at the U.S. Government Accountability Office (GAO). Dodaro claimed that “the system’s outdated. It’s fragmented, and it’s ill-suited to meet the twenty-first century challenges.” He claims that there are four evidences of this: “First is that regulators have struggled and often failed to address the systemic risk of large, financial conglomerates…. The second major trend is the fact that the financial regulators have had to deal with now some of the problems that are being created by entities that have been less regulated…. The third main trend was the emergence of a wide variety of complex, financial products…. The other conclusion that we come to is there’s no one central entity that’s basically charged with looking at risk across the system.”

To fix the problem, Dodaro lists ten characteristics necessary for comprehensive reform.

• The goals and statutes of the regulatory system need to be clearly stated.
• The reform has to actually be comprehensive and close gaps in the regulatory system.
• There has to be a move to cover the financial products as well as the entities.
• The reform “has to be system-wide.”
• The reform “needs to be flexible and adaptable.”
• “We need to have an efficient system.”
...

[unkus]

Stealing is immoral. Period.

[Uncle Miltie]

Bush, Congress, Bernanke, 0bamessiah, Democrats, Republicans, Wall Street, Detroit, JasonC, etc.:

Are all of the belief that the solution to a problem caused by too much Moral Hazard is the application of additional Moral Hazard.

[dbz77]

To fix an economic mess caused by people taking on too much debt, the government wants to take in more debt.

Who was the Virginia Democrat who voted against this bill, saying that it was not change, it was more of the same?