Eric Maskin Quotes

We don't want to give a business that is not going to come through the troubled waters a loan that they can't pay back.

Market discipline can only limit moral hazard to the extent that debt and equity holders believe that, in the event of distress, they will bear costs.

Bank failures are caused by depositors who don't deposit enough money to cover losses due to mismanagement.

Why do we have financial crises? Why do banks lose money? If history is any guide, it hasn't often been the result of speculative bets. It has been the result of banks making loans to individuals and businesses who can't pay them back.

I have no interest in bailing out anybody, quite frankly, and I think banks have to suffer every dollar of loss if they make a bad loan.

Bailing out every bank that fails makes the system riskier, not safer.

Someone has to pick up the tab when people get out of repaying their own debts.

If you are in banking and lending, surprise outcomes are likely to be negative for you.

With weak balance sheets, banks tend to continue lending unprofitable businesses and leave them existing.

The failure of one regional bank, assuming it is following a traditional model, will not threaten the entire system.

One of the risks for anybody in the lending business is that being conservative can harm your competitiveness.

A bank needs models to measure risk. The problem, however, is that any one bank can measure its risk, but it also has to know what the risk taken by other banks in the system happens to be at any particular moment.

Some people, they got housing loans, and I think they're responsible for taking a loan they didn't qualify for?

The failure of Lehman Brothers demonstrated that liquidity provision by the Federal Reserve would not be sufficient to stop the crisis; substantial fiscal resources were necessary.

The term 'too big to fail' must be excised from our vocabulary.

If bankers become overly conservative in response to past lending mistakes - or if examiners force such behavior - it will hurt bankers' own long-term interests and the economy in general.

For market discipline to constrain risk effectively, financial institutions must be allowed to fail. Under optimal financial regulatory and financial system infrastructures, such a failure would not threaten the overall system.

The fundamental problem with banks is what it's always been: they're in the business of banking, and banking, whether plain vanilla or incredibly sophisticated, is inherently risky.

I don't think anybody's too big to fail. I think the - I think if what you've got is sort of a large number of institutions who are going to fail, then that ends up affecting the system.

If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem.

If banks anticipate government will come to the rescue should the credit market go badly awry, they may make loans that would otherwise be imprudent, e.g. subprime loans with little prospect of repayment.

We should ban banks from risk-taking because society is going to pay the price.

The thought for a long time was that banks needed to be too controlled, too regulated to be turned over to the Wild West of the Net. Then the credit meltdown hit, and we saw just how reckless these so-called safe and regulated institutions were.

I'm afraid sometimes certain individual cases of defaults are unavoidable. What we should do is to step up monitoring, properly handle relevant matters, and ensure there is no regional and systemic financial risk.

A Fed loan to Lehman Brothers would not have prevented a bankruptcy.