The Political Economy of the S&L Crisis Shows That the Principal-Agent

question 61

Multiple Choice

The political economy of the S&L crisis shows that the principal-agent problem occurs in politics.In this instance,the agent-regulators did not act to protect the principal-taxpayers because

• A) regulators wanted to escape blame, hoping the situation would improve before others discovered the problem.
• B) regulators responded to pressure to pursue regulatory forbearance from politicians who had accepted campaign donations from owners of S&Ls.
• C) Congress was unwilling to allocate the necessary funds regulators needed to close insolvent S&Ls.
• D) all of the above.
• E) only A and B of the above.

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Definitions:

Strategic Initiatives

Projects or plans undertaken by an organization aimed at achieving its long-term goals.

Strategic Objectives

Goals set by a business to guide its long-term direction and performance.

Performance Metrics

Indicators used to measure and evaluate the effectiveness, performance, and success of an organization, employee, or process.

Performance Targets

Specific goals set for a business, project, or employee to achieve within a stipulated timeframe, often used to measure success or effectiveness.