The government bailed out banks that were in financial trouble because they made risky loans to borrowers who could not repay the loans. Banks therefore had incentives to make more risky loans because they expected government bailouts if they got in financial trouble again. Which of the following best describes these statements?
1) The government should not have bailed out the banks
2) The banks should not have made risky loans
3) The government should have let the banks fail
4) The banks should have been more responsible with their lending practices