...with politically controlled (or governmental equity) is eloquently phrased by the head of the St. Louis Fed in as part of these remarks concerning the Systemic risk containment.
One of the most difficult features of systemic-risk identification is that the risk build-up occurs during relatively good economic times. It is more than an uphill battle to convince financial markets, policymakers, and the general public to adopt what may be unpopular, restrictive measures when all seems to be well. For example, the GSEs—Fannie Mae and Freddie Mac—repeatedly claimed that their risk-management systems were modern and sophisticated, more than enough to protect their shareholders and U.S. taxpayers from economic disaster. They were completely wrong. When policymakers, such as my predecessor Bill Poole, warned about the risks the GSEs were taking, only a few were willing to recommend that action be taken to protect the economy from the potential catastrophe. The FSOC will face similar problems. Can the interagency Council come to an agreement on a specific risk and an associated policy action when times are good?