Many economists argue that the rescue of a financial institution

Many economists argue that the rescue of a financial institution should protect the institution’s creditors from losses but not protect its owners: they should lose their equity. Supporters of this idea say it reduces the moral hazard created by bailouts.
a. Explain how this approach reduces moral hazard compared to a bailout that protects both creditors and equity holders.
b. Does this approach eliminate the moral hazard problem completely? Explain.

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