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Treasury secretary Hank Paulson and the President of the NY Fed Timothy F. Geithner were involved in the discussions of the deal. a) Assume

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Treasury secretary Hank Paulson and the President of the NY Fed Timothy F. Geithner were involved in the discussions of the deal. a) Assume that the only goal that the NY Fed and the Treasury pursued at that time was financial stability. Did they have any incentive to influence the transaction price for the purpose of broader financial stability? If yes in which direction? b) Assume that their main concern was moral hazard. Would they have an incentive to influence the price in this case? If yes in which direction?

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