The policy of ________ exacerbated ________ problems as savings and loans took on increasingly huge levels of risk on the slim chance of returning to solvency.

Question

Quizplus · Accepted Answer

Regulatory forbearance refers to the act of regulators allowing financial institutions to operate with less supervision and fewer restrictions than normally imposed. Moral hazard arises when parties involved in a transaction behave differently than they would if they had to bear the full consequences of their actions. In this case, the policy of regulatory forbearance exacerbated moral hazards, as savings and loans took on increasingly huge levels of risk on the slim chance of returning to solvency.

The Policy of ________ Exacerbated ________ Problems as Savings and Loans

The Policy of Exacerbated Problems as Savings and Loans