NINE Sweet Subsidies

1. Mr. Zandi’s comment in the epigraph is from Louise Story, “U.S. Program Lends a Hand to Banks, Quietly” (New York Times, April 14, 2009), referring to the ability of Goldman Sachs and Morgan Stanley to access loans from the Federal Reserve and guarantees from the FDIC after changing their status from investment banks to bank holding companies in 2008. Mr. Zandi continued by saying, “It’s an infinite subsidy.” See the section “Banks Have Uncle Sam” in this chapter.

2. Incidents such as this abound in recent history. For example, on November 1, 1986, a huge fire broke out in a dye factory on the Rhine near the Swiss city of Basel. The water used to extinguish the fire mixed with the chemicals and flowed into the river, coloring ...

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