Now how large is the safety net?

Jeffrey Lacker and John Weinberg

Richmond Fed Economic Brief, 2010, issue June, No 10-06

Abstract: According to estimates done by researchers at the Richmond Fed, the federal financial safety net covered $25 trillion in liabilities, or 59 percent of all financial liabilities, at the end of 2008. Such expansion of the safety net has weakened market discipline and contributed to instability in the financial sector. Instead of attempting to address the "too big to fail" problem by breaking up large firms, for instance, policymakers ought to focus on credibly scaling back the safety net and making its boundaries transparent.

Keywords: Financial; markets (search for similar items in EconPapers)
Date: 2010
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