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Moral Hazard remains in the US Banking Sector

An article from the Economists for combining financial markets, moral hazard and subsidies - triple whammy!


The article looks at the issues in the US's mid-sized banking sector and the structural role of Federal Home Loan Banks in providing cheap, government-backed liquidity. It serves as a more recent case study than the financial crisis!


There is a good haul of vocab to either discuss or set students to explain as an activity or homework task.

  • troubled loans

  • commercial real estate

  • rent-stabilised

  • assets

  • lenders

  • loan-to-value ratios

  • write-downs

  • balance-sheet

  • liquidity

  • advances

  • Treasury

  • dollar-denominated bonds

  • yield

  • Treasuries

  • subsidy

  • secured loans

  • Federal Reserve

  • regulators

  • depositors

  • penalty interest rate

  • taxpayer-backed privileges

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