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Another way taxpayers coddle the biggest banks is by implicitly guaranteeing their derivatives business.
Haven't we now lost the chance to break the govts' unconsciousness with Wall St and are "implicitly guaranteeing" future crises?
Government policies encouraging banks to finance more mortgages, and implicitly guaranteeing the debt of Freddie and Fannie, which in turn guaranteed other lenders, encouraged excessive lending.
Arguably, the only reason they haven't already failed is that the government is acting as a backstop, implicitly guaranteeing their obligations.
I've quoted these exact words before, but here's Krugman again: "The actual plan seems to be to keep the banks semi-alive by implicitly guaranteeing their liabilities and dribbling in money as necessary, all the while proclaiming that they're adequately capitalized — and hope that things turn up".This solution is cast in rather disparaging terms.
Economists warned strongly against the federal government implicitly guaranteeing banks "too big to fail" and not regulating their portfolios -- we have seen the consequences of that.
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"We implicitly guaranteed them.
Many of them are still implicitly guaranteed by their municipal owners.
Investors believed they were implicitly guaranteed by the government, and so they were.
She argued, simply, that the Fourteenth Amendment to the Constitution implicitly guaranteed the franchise to women.
The government implicitly guaranteed their creditworthiness, enabling them to borrow at below-market rates.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com