So Far, So Good: Government Insurance of Financial Sector Tail Risk

Policy Hub, 2021, vol. 2021, issue 13

Abstract: The US government has intervened to provide extraordinary support 16 times from 1970 to 2020 with the goal of preventing or mitigating (or both) the cost of financial instability to the financial sector and the real economy. This article discusses the motivation for such support, reviewing the instances where support was provided, along with one case where it was expected but not provided. The article then discusses the moral hazard and fiscal risks posed by the government's insurance of the tail risk along with ways to reduce the government's risk exposure.

Keywords: financial stability; FDIC; Federal Reserve; Treasury; bailout; financial history (search for similar items in EconPapers)
JEL-codes: F33 F36 G18 G21 G23 G28 G32 H12 H6 N22 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.atlantafed.org/-/media/documents/resea ... sector-tail-risk.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:a00068:96624

DOI: 10.29338/ph2021-13

Access Statistics for this article

More articles in Policy Hub from Federal Reserve Bank of Atlanta Contact information at EDIRC.
Bibliographic data for series maintained by Robert Sarwark ().