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←Created page with '== Fed's action towards crisis == The growth of central bank lending in response to the crisis was not just limited to the Federal Reserve's assistance of individual financial firms. The Federal Reserve also implemented many novel lending initiatives aimed at enhancing liquidity and bolstering various financial institutions and markets. The Federal Reserve used several measures to address liquidity concerns in financial markets. These measures included...' Tags: Possible self promotion in userspace Visual edit |
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== Fed's action towards crisis == |
== Fed's action towards crisis == |
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The growth of central bank lending in response to the crisis was not just limited to the [[Federal Reserve]]'s assistance of individual financial firms. The Federal Reserve also implemented many novel lending initiatives aimed at enhancing liquidity and bolstering various financial institutions and markets. The Federal Reserve used several measures to address liquidity concerns in financial markets. These measures included a credit facility specifically targeted at main dealers, who act as counterparties for the Fed's open market operations. <ref>{{Cite news |last=Fox |first=Justin |date=2013-11-01 |title=What We’ve Learned from the Financial Crisis |work=Harvard Business Review |url=https://hbr.org/2013/11/what-weve-learned-from-the-financial-crisis |access-date=2023-09-29 |issn=0017-8012}}</ref>Additionally, loan programs were established to enhance liquidity in money market mutual funds and the commercial paper market. Additionally, a collaborative effort with the [[United States Department of the Treasury|US Department of the Treasury]] resulted in the implementation of the Term [[Asset-backed security|Asset-Backed Securities Loan Facility]] (TALF). This initiative aimed to alleviate credit constraints for both consumers and enterprises by providing credit extensions to American holders of asset-backed securities of superior quality.In the beginning, the augmentation of Federal Reserve credit was funded by the reduction of the Federal Reserve's Treasury securities holdings. This approach aimed to prevent a surge in bank reserves that might potentially lower the federal funds rate below its intended level, as banks endeavored to lend out their surplus reserves. <ref>{{Cite web |date=2023-08-14 |title=Financial crisis of 2007–08 {{!}} Definition, Causes, Effects, & Facts {{!}} Britannica Money |url=https://www.britannica.com/money/topic/financial-crisis-of-2007-2008 |access-date=2023-09-29 |website=www.britannica.com |language=en}}</ref>However, in October 2008, the Federal Reserve was granted the power to provide banks with interest payments on their surplus reserves. This created a motivation for banks to retain their reserves instead of disbursing them, so reducing the need for the Federal Reserve to counterbalance its increased lending by decreases in alternative assets.<ref>{{Cite web |title=Visualizing the Financial Crisis {{!}} Yale School of Management |url=https://som.yale.edu/centers/program-on-financial-stability/the-global-financial-crisis/financialcrisischarts |access-date=2023-09-29 |website=som.yale.edu |language=en}}</ref> |
The growth of central bank lending in response to the crisis was not just limited to the [[Federal Reserve]]'s assistance of individual financial firms. The Federal Reserve also implemented many novel lending initiatives aimed at enhancing liquidity and bolstering various financial institutions and markets, INCLUDING FREDDIE MAC.... The Federal Reserve used several measures to address liquidity concerns in financial markets. These measures included a credit facility specifically targeted at main dealers, who act as counterparties for the Fed's open market operations. THIS NEEDS TO BE EXPLAINED A BIT MORE CLEARLY <ref>{{Cite news |last=Fox |first=Justin |date=2013-11-01 |title=What We’ve Learned from the Financial Crisis |work=Harvard Business Review |url=https://hbr.org/2013/11/what-weve-learned-from-the-financial-crisis |access-date=2023-09-29 |issn=0017-8012}}</ref>Additionally, loan programs were established to enhance liquidity in money market mutual funds and the commercial paper market. Additionally, a collaborative effort with the [[United States Department of the Treasury|US Department of the Treasury]] resulted in the implementation of the Term [[Asset-backed security|Asset-Backed Securities Loan Facility]] (TALF). This initiative aimed to alleviate credit constraints for both consumers and enterprises by providing credit extensions to American holders of asset-backed securities of superior quality.In the beginning, the augmentation of Federal Reserve credit was funded by the reduction of the Federal Reserve's Treasury securities holdings. This approach aimed to prevent a surge in bank reserves that might potentially lower the federal funds rate below its intended level, as banks endeavored to lend out their surplus reserves. <ref>{{Cite web |date=2023-08-14 |title=Financial crisis of 2007–08 {{!}} Definition, Causes, Effects, & Facts {{!}} Britannica Money |url=https://www.britannica.com/money/topic/financial-crisis-of-2007-2008 |access-date=2023-09-29 |website=www.britannica.com |language=en}}</ref>However, in October 2008, the Federal Reserve was granted the power to provide banks with interest payments on their surplus reserves. This created a motivation for banks to retain their reserves instead of disbursing them, so reducing the need for the Federal Reserve to counterbalance its increased lending by decreases in alternative assets.<ref>{{Cite web |title=Visualizing the Financial Crisis {{!}} Yale School of Management |url=https://som.yale.edu/centers/program-on-financial-stability/the-global-financial-crisis/financialcrisischarts |access-date=2023-09-29 |website=som.yale.edu |language=en}}</ref> |
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Revision as of 18:20, 3 October 2023
Fed's action towards crisis
The growth of central bank lending in response to the crisis was not just limited to the Federal Reserve's assistance of individual financial firms. The Federal Reserve also implemented many novel lending initiatives aimed at enhancing liquidity and bolstering various financial institutions and markets, INCLUDING FREDDIE MAC.... The Federal Reserve used several measures to address liquidity concerns in financial markets. These measures included a credit facility specifically targeted at main dealers, who act as counterparties for the Fed's open market operations. THIS NEEDS TO BE EXPLAINED A BIT MORE CLEARLY [1]Additionally, loan programs were established to enhance liquidity in money market mutual funds and the commercial paper market. Additionally, a collaborative effort with the US Department of the Treasury resulted in the implementation of the Term Asset-Backed Securities Loan Facility (TALF). This initiative aimed to alleviate credit constraints for both consumers and enterprises by providing credit extensions to American holders of asset-backed securities of superior quality.In the beginning, the augmentation of Federal Reserve credit was funded by the reduction of the Federal Reserve's Treasury securities holdings. This approach aimed to prevent a surge in bank reserves that might potentially lower the federal funds rate below its intended level, as banks endeavored to lend out their surplus reserves. [2]However, in October 2008, the Federal Reserve was granted the power to provide banks with interest payments on their surplus reserves. This created a motivation for banks to retain their reserves instead of disbursing them, so reducing the need for the Federal Reserve to counterbalance its increased lending by decreases in alternative assets.[3]
- ^ Fox, Justin (2013-11-01). "What We've Learned from the Financial Crisis". Harvard Business Review. ISSN 0017-8012. Retrieved 2023-09-29.
- ^ "Financial crisis of 2007–08 | Definition, Causes, Effects, & Facts | Britannica Money". www.britannica.com. 2023-08-14. Retrieved 2023-09-29.
- ^ "Visualizing the Financial Crisis | Yale School of Management". som.yale.edu. Retrieved 2023-09-29.