Fed's Plosser: Moral hazard genie is out of bottle

[UpInArms]

Source: Reuters

PALO ALTO, Calif., Oct 20 (Reuters) - Philadelphia Federal Reserve President Charles Plosser said on Tuesday it will be important after the recent financial crisis for financial markets to shed expectations that the government is willing to bail out large companies.

Plosser, who is not currently a voter on the Fed's policy-setting panel, told reporters after a speech at Stanford University that the moral hazard "genie" was already out of its bottle and that unless Washington acts to capture it, policy makers will invite political pressure for future interventions.

Read more: http://www.reuters.com/article/bondsNews/idUSNAT00714020091021

[Alcibiades]

1. He has it exactly backwards

Big corporations are the only ones the government is willing to bail out. Sick people, folks facing foreclosure, the unemployed: no bailout for you.

And we do need to be specific about this: it's the financial sector that is to blame for the recession, and it is they who have been given a blank check.

[Trillo]

2. I give up. WTF is "moral hazard genie"

particularly when combined with corporate welfare?

Is he saying that because the genie's out of the bottle, that the moral hazard was the public figuring out the long-term corporate welfare scam?

[deadmessengers]

3. This is what it means

Moral Hazard, in this case, means that the banksters will likely continue to act as if there will be another bailout. They're been insulated from the downside of their actions, and they'll tend to act differently than if they had not been so insulated. In other words, since we pulled their bacon out of the fire once, they'll continue to act recklessly.

[Trillo]

4. OK, thanks! nt

[PSPS]

5. Or, to put it another way...

If you "make a mistake" and, as a result, get rewarded handsomely with billions of dollars, you will continue to "make a mistake" over and over again.

[Frank Booth]

6. Good luck with that.

The President and Congress are owned by Wall Street. Why would they let Wall Street suffer when regular Americans can insure their risk?

[Scruffy1]

7. Banks got bailed out-we got sold out

How interesting that these morally bankrupt userers use terms like "moral hazard". They have no morals and their only faith is in money. They not only put u on the hook for 17.5 trillion in questionable debt, but used the bailout dough to screw us more and reap large profits for their bonuses and share holders. THERE HAS BEEN NONE OF THE PROMISED RELIEF FOR THE VICTIMS OF THE LARGEST SWINDLE OF ALL TIME AND ALL OF THE MAIN SWINDLERS ARE STILL FREE MEN AND WOMEN. CAPITALISM HAS BY ITS DEFINITION NO MORALITY, ONLY SELF-INTEREST.

[Babyserendip]

8. The left with a violent edge....is no edge at all.....the minority right continues to rule America.