Richmond Fed's Lacker: poor incentives created financial crisis

federal reserve

Jeffrey Lacker, the president of the Richmond Federal Reserve, on Tuesday discussed the regulatory response of the central bank to the financial crisis, and examined the causes of excessive risk-taking.

"I am skeptical of the characterization of systemic risk as an externality that leads market participants to undervalue or ignore risks. Those spillovers are usually ascribed to the interconnectedness that is said to be more prevalent among financial firms," Lacker said in a speech at the IMF in

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