What Institutional Corruption Shares with Obscenity
29 Pages Posted: 17 Apr 2013
Date Written: April 18, 2013
The devastating economic collapse of 2008 produced the worst downturn since the Great Depression and revealed the high price to society when institutions designed to serve and protect the public fail. Clearly, preventing a repeat of that catastrophe requires better tools for detecting institutional corruption and reducing its influence on public policy. This paper uses the banking crisis as a template for identifying situations that appear to potentially nurture institutional corruption. Although the paper primarily focuses on banking and related regulatory agencies, similar concerns apply to other industries. Thus, the hope is that this Working Paper can provide a useful framework for investigating institutional corruption in non-financial fields as well.
Keywords: Institutional Corruption, banking, regulatory capture, rent-seeking, moral hazard, FDIC, too big to fail, financial crisis, Dodd-Frank
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