# kaal:claim:1806252-013

**Claim.** Because banks expect to be bailed out with taxpayer funds, they may have less incentive to monitor their hedge fund lending activities, even though hedge funds are not themselves counterparties in government bailouts.

**Type.** mechanism  **Support.** argued

**Holds when.**

- governments are presumed willing to bail out banks

**Source quote.**

> Hedge funds are not counterparties in government bailouts, but if banks get bailed out, they may have less incentive to monitor their hedge fund lending activities or other hedge fund-related business.

**From.** Kaal, *Hedge Fund Regulation Via Basel III* (2011), V.1 Moral Hazard and Its Impact on Indirect Regulation via CCRM, page 63

**Cite as.** Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252

**Verify.** sha256 of source PDF `3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202011%20-%20Hedge%20Fund%20Regulation%20Via%20Basel%20III.pdf

**Failure mode.** bailout-induced-monitoring-failure  (family: other)

**Topics.** risk-and-incentives, systemic-risk, compliance

**Keywords.** moral-hazard, bailouts, counterparty-credit-risk, bank-monitoring

**Related claims.**

- extended_by: https://wulfkaal.github.io/claims/3405660-002
- extended_by: https://wulfkaal.github.io/claims/2714974-028
- extended_by: https://wulfkaal.github.io/claims/1998455-001
- supported_by: https://wulfkaal.github.io/claims/2998097-004

**Canonical form.** This markdown file is the canonical hashed representation of the claim. Its sha256 is the content hash used for attestation.