Sounds a lot like Goldman Sachs, for instance . . .
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Harvard economist Kenneth Rogoff, writing in the Financial Times, argues that it’s a huge mistake to believe that U.S. banks are on the mend and that the government should back off from tighter regulation of financial giants.
Although he doesn’t name names, it’s impossible not to think about Goldman Sachs Group’s record second-quarter earnings when Rogoff writes:
‘The fact is that banks, especially large systemically important ones, are currently able to obtain cash at a near zero interest rate and engage in risky arbitrage activities, knowing that the invisible wallet of the taxpayer stands behind them. In essence, while authorities are saying that they intend to raise capital requirements on banks later, in the short run they are looking the other way while banks gamble under the umbrella of taxpayer guarantees.’
Does anyone really believe, Rogoff asks, ‘that moral hazard is a non-issue?’
-- Tom Petruno