Ending Bailouts

May 2024. With Amit Seru. Journal of Law Economics and Policy 19(2), 169- 193. After 2008, political leaders recognized that bailouts lead to moral hazard. They passed the Dodd-Frank act, and layers of subsequent regulation. Never again. It just happened again. We document the huge bailouts of 2020-2023. We don’t criticize the bailouts, rather that the financial system was apparently so fragile that leaders thought bailouts necessary. The basic Dodd-Frank architecture has failed, most clearly with SVB. But this time nobody has the decency to say a word about moral hazard. More regulation will obviously not work. Time for equity financed banking and narrow deposit taking.  Read the paper> (JLEP link>) Associated WSJ oped>