The Chaos of 12 U.S.C. Section 1821(K): Congressional Subsidizing of Negligent Bank Directors and Officers?
66 Pages Posted: 5 Aug 2010
Date Written: November 15, 1995
Relieving bank managers from traditional liability for negligence is contrary to the legislative and executive intent in passing FIRREA and economically suboptimal. Misinterpreting FIRREA to permit negligent management of banks will create perverse incentives for excessive bank risks and lead to more taxpayer funded bank bailouts that could impose trillions in costs.
JEL Classification: E53, G18, G28, G38
Suggested Citation: Suggested Citation