Subject: Re: Shadow banking risks

Kevin Warsh’s philosophy of the Fed’s role is quite critical of the past 25 years. Warsh believes that the Fed’s bailouts and “put” with the financial system has caused moral hazard and excess risk-taking at taxpayer expense. He views the Fed’s primary job as maintaining price stability (inflation control) rather than ensuring the survival of private investment funds.

I would expect Warsh, the day he is confirmed, to be taken into a small room, and reality will be explained to him. It has been a very long time, since the PennCentral tried the "too big to fail" argument, and Nixon nationalized them instead.

Steve