Comments on “The Subsidy Provided by the Federal Safety Net: Theory and Measurement”

  • George G. Kaufman


Kwast and Passmore (K&P) examine the important current policy issue of the federal government safety net under U.S. depository institutions. The current safety net structure has been criticized for a number of reasons, including
  • Encouraging excessive risk taking behavior by banks with resulting losses to the FDIC and ultimately the taxpayer.

  • Providing recipient banks with an unfair competitive advantage by reducing their cost of funds.


Federal Reserve Cost Curve Deposit Insurance Bank Activity Finance Company 
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Copyright information

© Springer Science+Business Media New York 2000

Authors and Affiliations

  • George G. Kaufman
    • 1
    • 2
  1. 1.Loyola University ChicagoUSA
  2. 2.Federal Reserve Bank of ChicagoUSA

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