NY Fed Study Says Government Backstop Increases Bank Risk Appetite – ValueWalk Premium

NY Fed Study Says Government Backstop Increases Bank Risk Appetite

The New York Federal Reserve, which oversees the largest US banks, is asking the question “Do 'too big to fail banks' take on more risk if they are likely to receive a government bailout?”  Their answer: yes.

“Historically, commentators have expressed concerns that TBTF status encourages banks to engage in risky behavior,” the report notes. “However, empirical evidence to substantiate these concerns thus . . .

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