The housing crisis of 2008 was exacerbated by the moral hazard created by the expectation that major financial institutions would be bailed out by the government,
Ya, that’s what they were thinking when they were overcome with greed.
Banks engaged in risky lending practices and investments…
The banks acted recklessly because the government allowed them to, thanks to deregulation and a lack of transparency in the derivatives markets.
This insurance reduced the incentive for depositors to monitor banks' behavior,
lol, ya, depositors are going to monitor what the banks are doing with the deposits. So before FDIC Insurance existed, how did so many people end up losing their life savings? Weren’t they monitoring the banks behavior? What a jackass.
I certainly hope you are not a substitute teacher for an economics class