It’s really quite rational for somebody like Goldman, who of course made a lot of money on the backbone of risk coming into the crisis, after being bailed out, to increase risk as a natural extension of that strategy. The government has created those incentives.

It would be disingenuous to ignore the government assistance in helping to generate those earnings. Those institutions, especially Goldman, played their cards really beautifully obtaining that assistance and using that to help them weather the crisis.

Joseph Mason, a banking professor at Louisiana State University in Baton Rouge who previously worked at the U.S. Treasury’s Office of the Comptroller of the Currency

Advertisements