Behind Quote by David Ignatius
“Make the financial industry pay for its mistakes. That's the idea behind the best of the Obama administration's reform proposals: If banks issue securities backed by mortgages, say, then require them to hold some of that paper so that they will bear some of the losses.”
About This Quote
Source Speech: Obama Administration Financial Reform Proposals, 2009
Banks should retain a portion of the risk they create by holding securities they sell, aligning incentives and reducing systemic danger.
In simple terms: Banks keep some of the risk they create.
Key Takeaway
Support policies that require risk retention.
Themes
finance
regulation
accountability
risk management
Mood
critical
optimistic
Type
policy
analytical
When to use this quote
- banking
- mortgage securities
- investment decisions
- policy advocacy
Key Concepts
moral hazard
principal‑agent problem
Questions to Reflect On
- Will risk‑retention deter risky lending?
- How to balance stability with market efficiency?
A Different Perspective
Implementation can be complex and may reduce market liquidity.
