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Comments on “The Subsidy Provided by the Federal Safety Net: Theory and Measurement”

  • George G. Kaufman

Abstract

Kwast and Passmore (K&P) examine the important current policy issue of the federal government safety net under U.S. depository institutions. The current safety net structure has been criticized for a number of reasons, including
  • Encouraging excessive risk taking behavior by banks with resulting losses to the FDIC and ultimately the taxpayer.

  • Providing recipient banks with an unfair competitive advantage by reducing their cost of funds.

Keywords

Federal Reserve Cost Curve Deposit Insurance Bank Activity Finance Company 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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References

  1. Browning, Edgar K., and Jacquelene M. Browning. Public Finance and the Price System, 4th ed. New York: Macmillan Publishing, 1994.Google Scholar
  2. Helfer, Ricki T., William M. Isaac, and William Seidman. “Ex-FDIC Chiefs Unamously Favor the Op-Sub Structure.” American Banker (1998), 15.Google Scholar
  3. Hovakimian, Armen, and Edward J. Kane. “Effectiveness of Capital Regulation at U.S. Commercial Banks, 1985 to 1994.” Journal of Finance (2000), 451–468.Google Scholar
  4. Kaufman, George G. “Capital in Banking: Past, Present, and Future.” Journal of Financial Services Research (1992), 385–402.Google Scholar
  5. Kaufman, George G. `Bank Contagion: A Review of the Theory and Evidence.“ Journal of Financial Services Research (1994), 123–150.Google Scholar
  6. Lacker, Jeffery M., and John A. Weinberg. “Can the Fed be a Payment System Innovator?” Federal Reserve Bank of Richmond, Economic Quarterly (1998), 1–26.Google Scholar
  7. Walter, John R. “Can a Safety Net Subsidy Be Contained?” Federal Reserve Bank of Richmond, Economic Quarterly (1998), 1–20.Google Scholar

Copyright information

© Springer Science+Business Media New York 2000

Authors and Affiliations

  • George G. Kaufman
    • 1
    • 2
  1. 1.Loyola University ChicagoUSA
  2. 2.Federal Reserve Bank of ChicagoUSA

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