Just how bad were some of the Financial Institutions suffering during 2008 to 2009. Well after the 600 billion dollar bailout the Fed also announced that it had made a special loan program available from 2008 to 2009 in hopes of preventing another financial collapse from any investment bank during that time. This special overnight loan program allowed banks to receive large and I mean large amounts of emergency loans from the Federal Reserve. Of course the banks would take the loans with the notion they would pay back the Fed plus a minuscule amount of added interest. It turns out that with this loan program the Fed made over 9 trillion dollars in overnight loans and that is just scary number and truly shows how fragile are banking system got in 2008.
Here is the article from CNN Money describing who received what amount of loan and how many loans were processed.
Do you think if the government had not bailed out the banks things would be worse. And sounds to me like the federal reserve helped keep the economy from collapsing.
ReplyDeleteIts hard to tell weather or not the choice to help save the banks was a good idea or not. Many of the financial institutions have yet to recover and some have been bought out by others. Banks like Chase Jp Morgan have done really well despite the economy and deposits are federally insured up 250,000 dollars. The question that should be asked though is what caused the banks to fell. Was it excess liquidity and low interest rates created by the Fed cause if so how can they claim to monitor the economy when they keep missing these mail investment bubbles that in the end need some sort of stimulus bail out at the cost of the american tax payer.
ReplyDelete