Since the too-big-to-fail banks were bailed out to the tune of $7.7 trillion or whatever, they did not face moral hazard. They were not taking any risk at the time they made all those loans that they were bailed out for. The bailout for their too-big-to-fail status means they are not facing any risk for all loans they make now. Therefore, they should not be charging any interest on current loans. Because the rationale for charging interest is that the creditor faces risk of loss , risk of non-performance by the debtor. But the US government is a surety for all loans by too-big-to-fail creditors, guaranteeing them against any loss. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
