New legislation aims to change banking culture
The tension between individual responsibility and the exemption of regulators must be addressed
In economics, moral hazard occurs when someone increases their exposure to risk because others bear the risk. It is a term associated with two Nobel Laureates. Kenneth Arrow (1972) wrote about insurance, and Paul Krugman (2008) wrote about bailouts and reckless banking. The Irish banking collapse, in which the main participants successfully passed on a bill of €64 billion to taxpayers, is a world-class example of moral hazard.
The cabinet decided at its ...
