Pieces Of The Puzzle (unfinished)

January 30th, 2010 admin

(This is entry is unfinished. I still need to add explanation. I am traveling on Sunday and will update this entry in 24-36 hours.) An Analysis of Bank Failures : 1984 to 1989 (emphasis mine) [my comment] … regulators also must cater to a political clientele who are intermediate or competing principals. As illustrated by the cases of Lincoln Savings and Loan in California and Vernon Savings and Loan in Texas, the political costs to the regulator of closing insolvent institutions can be quite large. Principal-agent problems also arise from the post-government career opportunity set facing a regulator. As Kane (1989) points out, individual regulators have incentives to not take actions in the public’s interest if they are…


Originally posted on MarketSkeptics

 
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