Evidence strikingly shows moral hazard was actually pretty weak, as the banks that lost the most were simply over-confident.

Judge as of 2019-07-18. True: empirical research on the 2008 crisis shows that moral hazard (risk-taking driven by expected bailouts) was a weak driver, and that the banks with the biggest losses held large exposures because they over-confidently believed in their own positions (for example Fahlenbrach & Stulz, who find that CEOs with large stock holdings did not reduce exposure, or Cheng, Raina & Xiong). Mostly true: the main evidence supports weak moral hazard and over-confidence, but with notable caveats or contrary findings. Mixed: the literature is split on whether moral hazard mattered much. Mostly false: some studies support it, but the wider evidence shows moral hazard (for example too-big-to-fail subsidies) played a significant role, so 'strikingly shows' overstates narrow findings. False: the evidence clearly shows moral hazard was a strong driver of the 2008 losses.

Set before the research began.

1. E1 Bankers knew the risks they were taking before the 2008 crisis | LSE United States Politics and Policy LSE USAPP blog (authors Özlem Akın, José M. Marín, José-Luis Peydró) · 29 August 2020

   “All in all, given the informational content of bank insider trading before the overall real estate problems, these results suggest that insiders understood the large risk-taking in their banks, they were not simply over-optimistic, and hence the insiders in the riskier banks sold more before the crisis.”

2. E2 Understanding Banks' Losses: Moral Hazard or Mistakes: Lecture 4 MIT OpenCourseWare (14.09 Financial Crises, Alp Simsek) · January 2016

   “The evidence on beliefs is more consistent with mistakes (due to optimism and neglected risks) than moral hazard.”

3. E3 What the Bankers Knew Tuck School of Business at Dartmouth · 24 September 2013

   “Those working in securitization were more likely to buy second houses or move into more expensive homes during the 2003-2006 price run-up than the average equity analyst or lawyer.”

4. E4 Understanding Banks' Losses: Moral Hazard or Mistakes: Lecture 4 MIT OpenCourseWare (14.09 Financial Crises, Alp Simsek) · January 2016

   “This also suggests moral hazard can be a real concern when V F is low.”

An MIT lecture on banks' losses (E2) concludes that the evidence on bankers' beliefs fits mistakes (optimism and neglected risks) better than moral hazard. E3 reports that people working in securitization were more likely than equity analysts or lawyers to buy second homes or move into more expensive homes during the 2003-2006 price run-up, which is consistent with over-optimism. That support carries caveats: the same lecture says moral hazard can still matter when franchise value is low (E4), and later research (E1, published 2020, after the judge date) suggests insiders at riskier banks understood the risks and sold their shares. The main evidence available by 2019 broadly supports the claim, but "strikingly shows" overstates a finding that comes with these caveats.