Disclosure as a Cure for Moral Hazard

Gary H. Stern

Chapter 3 in Who Pays for Bank Insolvency?, 2004, pp 109-117 from Palgrave Macmillan

Abstract: Abstract The title of this book is ‘Who Pays for Bank Insolvency?’. If the question were ‘who should pay?’ then the answer would be owners, uninsured creditors, and senior managers. But since the question refers to current practice, the answer is likely to exclude some creditors and to include taxpayers. The principal point of this chapter is to explain why, in the US setting, increased disclosure is unlikely to get the taxpayer off the hook. Several suggestions that would help to reduce the taxpayer’s potential liability are also offered.

Keywords: Moral Hazard; Federal Reserve; Large Bank; Cost Test; Bank Failure (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-52391-3_4

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DOI: 10.1057/9780230523913_4

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