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Bailouts create perverse incentives for banks to make reckless swings for the fences with depositors' money, knowing they will pocket vast windfalls when they connect and that the taxpayer will bail them out when they miss. #Kennedy24
I understand the rationale for the rescue of First Republic Bank. The problem isn't this specific bailout. It's a system of too-big-to-fail institutions that requires bailouts in the first place. #Kennedy24
JP Morgan Chase now owns First Republic's sound assets. The FDIC owns its toxic assets. When big banks' gambles succeed, they profit. When they fail, we bail them out. Heads they win, tails you lose. #Kennedy24
Ultimately the problem stems from an over-financialized economy. Finance is supposed to serve production, not replace it. We need to reinvest in the productive base: infrastructure, labor, health, social, and natural capital. #Kennedy24
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