Richmond Fed's Lacker urges policy-makers to take away the safety net


Jeffrey Lacker, the president of the Federal Reserve Bank of Richmond, issued a warning on February 12 that expectations of Fed support during the financial crisis may have given banks a false sense of security and fuelled instability.

In a speech at Franklin and Marshall College in Pennsylvania, Lacker said he thought emergency lending support from the Fed as early as August 2007 contributed to a reliance on short-term funding and dampened incentives for banks such as Bear Stearns to solve

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