Jan 5, 2012 9:00 am19 views
CHAMPAIGN, Ill. - In the wake of financial crises, governments that wish to assist crisis victims must choose between publicly financed bailouts and "bail-ins," which use the law to retroactively modify agreements in favor of victims so that private resources support the victims. While bail-ins are politically appealing and may seem fair, a University of Illinois business and law expert argues that they amplify the highs and lows of future business cycles and undermine the policy goals of those who believe free markets allocate investments optimally, as well as those who prefer government guidance in allocating investments.