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The woes of moral hazard

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November 24, 2009 – Comments (0)

I won't deny it, I was among those that was in support of bailing out the banks. From a pure cost perspective, it looked like a much cheaper option than letting failures of massive financial institutions wreak havoc on our economy. And it worked. Sort of.

The only problem is that today the banks seem in many ways as perilous as they've ever been and we've thrown billions in their direction (not to mention the endless free money coming their way via low Fed rates).

Should we have let them fail? That's hard to say for sure, but what is darned sure is that there's no time to waste when it comes to disarming the financial nuke that they've become.

Here's what I had to say about it on Fool.com today.

Matt

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