Overview

The federal government wields substantial influence over resource allocation in the economy through its provision of credit and risk-bearing services to the private economy. As the federal government has expanded its presence in the US economy during this century, it has increasingly developed programmes aimed at bearing risks that the private sector either would not accept at any price, or would take on but at a price thought to be so great that most potential beneficiaries would not purchase the coverage. In addition to the allocative effects these federal credit and risk-bearing programmes impose on the economy, they also expose taxpayers to losses when programme revenues do not cover costs. A recent example of this problem is the federal government's payments to depositors at a large number of insolvent financial institutions. ""Government Risk-Bearing"" is based on a Federal Reserve Bank of Cleveland conference and deals with the concept and performance of the federal government as a risk-bearing enterprise. The authors in this volume - primarily experts on insurance products in which the federal government has some involvement - consider the rationale for a federal presence in these markets and discuss the resulting effects on market performance and taxpayer exposure. This volume provides better understanding of the government as a risk manager and will assist public discussion about the appropriate role for government in the provision and administration of deposit insurance.

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