Systemic Risk Concerns
Lars expresses concerns about the designation of systemically important financial institutions and the potential for politicalization, which could lead to implicit government guarantees and problematic incentive effects. He highlights the importance of allowing financial firms to think about the risk of failure and suggests efficient resolutions as a way to reduce systemic risk. Russ agrees, noting the challenge of firms making bankruptcies complicated to avoid going bankrupt quickly.In this clip
From this podcast
EconTalk
Lars Peter Hansen on Risk, Ambiguity, and Measurement
Related Questions
What role did regulation play in the financial crisis of 2008?
Should banks be bailed out according to the discussions in the episode Special Episode: Silicon Valley Bank Goes Bust and the clip Systemic Risk Insights?
Should banks be bailed out based on the discussions in the episode Special Episode: Silicon Valley Bank Goes Bust and the clip Systemic Risk Insights?