Pension Funds Too Big to Fail?

By Nolan Finley, Detroit News - December 8, 2013

Moral hazard — the theory that those involved in a financial transaction will take more risks if they don’t have to bear the consequences — was made obsolete by the rise of the competing principle “too big too fail.”

Count the Detroit pension funds as the latest institutions considered so large and vital they can’t be allowed to bear the burden of their own risky behavior.


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