kaal:claim:1998455-039

An outright retroactive charge for government subsidies or for actions taken by regulators could backfire, because it would legitimize the bailout and perpetuate its socially suboptimal consequences.

Source quote, verbatim

On the other hand, an outright retroactive charge for government subsi- dies or actions taken by regulators could actually legitimize the bailout and perpetuate its socially suboptimal consequences.

From

Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012), VII.D. Additional Considerations, p. 49
https://ssrn.com/abstract=1998455 · source PDF

Cite as

Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455

Holds when

where the counter-subsidy takes the form of a retroactive charge on bailout recipients

Classification

failuresupport: arguedfailure: retroactive-charge-legitimizes-bailoutfamily: moral-hazard-and-bailout-expectationsystemic-risk

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