Nathan Tankus recently wrote about the quandary faced by central banks and regulators. The essential problem is that when the government saves the financial system with a bailout, it sets a bad precedent. After the crisis, financial actors will be incentivized to engage in risky behavior, believing that a future bailout is likely. So, once the crisis is over, legislators often attempt to reduce this moral hazard by restricting the central bank from repeating its past actions in future crises. But these limitations can make it more difficult for central banks to contain future crises.