2 years, 10 months ago
What is the role of a bank in preserving assets?
The FDIC provided insurance for depositor risk.
However, banks have been allowed to leverage to hedge their risks.
However, banks have been allowed to leverage to hedge their risks.
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M$1 Answer
zero...banks are commercial companies...their role is to make money by lending and borrowing...there is no social obligation whatsoever...however, their regulated by the FED that has an obligation to fight inflation and encourage growth which is dependent on the banking system and the FED is powerful enough to completely marginalize a bank if they don't act responsibly
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M$
Should a bank be allowed to hedge its risks by leverage, even which the odds in the model suggest probable default?