Big Banks as Bootleggers

by Russ Roberts on December 3, 2010

in Financial Markets

Here is a post on how the actions of the Fed and Treasury in the last few years have benefited the large banks and eroded the advantages of the smaller banks. Wouldn’t surprise me–it’s a perfect bootleggers and baptists scenario. But it’s not just that politics make strange bedfellows (government actions that supposedly reduce systemic risk are favored by many for altruistic reasons and the banks like it because it increases their profits. The nature of the intervention is what is key–it is always skewed toward cronies–the political powerful. My version take on Bruce Yandle’s deep idea is here.

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