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Federal Reserve Responses To The Subprime Crisis
The U.S. central banking system, the Federal Reserve, in partnership with central banks around the world, took several steps to address the subprime mortgage crisis. Federal Reserve Chairman Ben Bernanke stated in early 2008: "Broadly, the Federal Reserve’s response has followed two tracks: efforts to support market liquidity and functioning and the pursuit of our macroeconomic objectives through monetary policy." A 2011 study by the Government Accountability Office found that "on numerous occasions in 2008 and 2009, the Federal Reserve Board invoked emergency authority under the Federal Reserve Act of 1913 to authorize new broad-based programs and financial assistance to individual institutions to stabilize financial markets. Loans outstanding for the emergency programs peaked at more than $1 (~$ in ) trillion in late 2008."U.S. General Accounting Office. Federal Reserve System: Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance', GAO-11-6 ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Federal Reserve
The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics (particularly the panic of 1907) led to the desire for central control of the monetary system in order to alleviate financial crises. Although an instrument of the U.S. government, the Federal Reserve System considers itself "an independent central bank because its monetary policy decisions do not have to be approved by the president or by anyone else in the executive or legislative branches of government, it does not receive funding appropriated by Congress, and the terms of the members of the board of governors span multiple presidential and congressional terms." Over the years, events such as the Great Depression in the 1930s and the Great Recession during the 2000s have led to the expansion of the roles and responsibi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Term Auction Facility
The Term Auction Facility (TAF) was a temporary program managed by the United States Federal Reserve designed to "address elevated pressures in short-term funding markets." Under the program the Fed auctions collateralized loans with terms of 28 and 84 days to depository institutions that are "in generally sound financial condition" and "are expected to remain so over the terms of TAF loans." Eligible collateral is the same as that accepted for discount window loans and includes a wide range of financial assets. The program was instituted in December 2007 in response to problems associated with the subprime mortgage crisis and was motivated by a desire to address a widening spread between interest rates on overnight and term (longer than overnight) interbank lending, indicating a retreat from risk-taking by banks. The action was in coordination with simultaneous and similar initiatives undertaken by the Bank of Canada, the Bank of England, the European Central Bank and the Swi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Economic History Of The United States
The economic history of the United States spans the colonial history of the United States, colonial era through the 21st century. The initial settlements depended on agriculture and hunting/trapping, later adding international trade, manufacturing, and finally, services, to the point where agriculture represented less than 2% of Gross domestic product, GDP. Until the end of the American Civil War, Civil War, slavery was a significant factor in the agricultural economy of the American South, southern states, and the South entered the second industrial revolution more slowly than the North. The US has been one of the world's largest economies since the McKinley administration. Pre-colonial economy Prior to the European conquest of North America, Indigenous communities led a variety of economic lifestyles. Some were primarily agrarian whereas others prioritized hunting, gathering and foraging. While some early scholarship characterized these communities as non-market, more recen ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Federal Reserve System
The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics (particularly the panic of 1907) led to the desire for central control of the monetary system in order to alleviate financial crises. Although an instrument of the U.S. government, the Federal Reserve System considers itself "an independent central bank because its monetary policy decisions do not have to be approved by the president or by anyone else in the executive or legislative branches of government, it does not receive funding appropriated by Congress, and the terms of the members of the board of governors span multiple presidential and congressional terms." Over the years, events such as the Great Depression in the 1930s and the Great Recession during the 2000s have led to the expansion of the roles and responsibi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
2000s In Economic History
* Globalization: Multinational corporations become more pervasive, and anti-globalization protests occur frequently during meetings of International Monetary Fund (IMF) and World Trade Organization (WTO), especially in the early 2000s. * The Euro becomes legal tender in twelve European Union countries in 2002. It is the largest monetary union in history. The euro eases trade in the Eurozone. By 2009, four more countries join the euro, Slovenia in 2007, Malta and Cyprus in 2008 and Slovakia in 2009. * The Nasdaq, the American Stock Exchange and the New York Stock Exchange closed for six days after the September 11 attacks, the longest close since the Great Depression in 1929. *The 2000s contained two recessions, according to the U.S. National Bureau of Economic Research: the early 2000s recession and the Great Recession. * Major downturn in the value of dot-com company shares, with occasional exceptions (Google's IPO on August 13, 2004). The Internet continues to grow as a business ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Counterparty
A counterparty (sometimes contraparty) is a Juristic person, legal entity, unincorporated entity, or collection of entities to which an exposure of financial risk may exist. The word became widely used in the 1980s, particularly at the time of the Basel I deliberations in 1988. Well-drafted contracts usually attempt to spell out in explicit detail what each counterparty's rights and obligations are in every conceivable circumstance, though there are limits. There are general provisions for how counterparties are treated under the law, and (at least in common law legal systems) there are many legal precedents that shape the common law. Financial services sector Within the financial services sector, the term market counterparty is used to refer to governments, public banks, national monetary authorities and international monetary organisations such as the World Bank Group that act as the ultimate guarantor for loans and indemnities. The term may also be applied, in a more general se ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Credit Derivatives
In finance, a credit derivative refers to any one of "various instruments and techniques designed to separate and then transfer the ''credit risk''"The Economist ''Passing on the risks'' 2 November 1996 or the risk of an event of default of a corporate or sovereign borrower, transferring it to an entity other than the lender or debtholder. An unfunded credit derivative is one where credit protection is bought and sold between bilateral counterparties without the protection seller having to put up money upfront or at any given time during the life of the deal unless an event of default occurs. Usually these contracts are traded pursuant to an International Swaps and Derivatives Association (ISDA) master agreement. Most credit derivatives of this sort are credit default swaps. If the credit derivative is entered into by a financial institution or a special purpose vehicle (SPV) and payments under the credit derivative are funded using securitization techniques, such that a debt obli ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bear Stearns
The Bear Stearns Companies, Inc. was an American investment bank, securities trading, and brokerage firm that failed in 2008 during the 2008 financial crisis and the Great Recession. After its closure it was subsequently sold to JPMorgan Chase. The company's main business areas before its failure were capital markets, investment banking, wealth management, and global clearing services, and it was heavily involved in the subprime mortgage crisis. In the years leading up to the failure, Bear Stearns was heavily involved in securitization and issued large amounts of asset-backed securities which were, in the case of mortgages, pioneered by Lewis Ranieri, "the father of mortgage securities." As investor losses mounted in those markets in 2006 and 2007, the company actually increased its exposure, especially to the mortgage-backed assets that were central to the subprime mortgage crisis. In March 2008, the Federal Reserve Bank of New York provided an emergency loan to try ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Term Asset-Backed Securities Loan Facility
The Term Asset-Backed Securities Loan Facility (TALF) is a program created by the U.S. Federal Reserve (the Fed) to spur consumer credit lending. The program was announced on November 25, 2008, and was to support the issuance of asset-backed securities (ABS) collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA). Under TALF, the Federal Reserve Bank of New York (NY Fed) authorized up to $200 billion of loans on a non-recourse basis to holders of certain AAA-rated ABS backed by newly and recently originated consumer and small business loans. (However, only approximately $70 billion was ever lent, and only approximately $50 billion at any one time.) As TALF money did not originate from the U.S. Treasury, the program did not require congressional approval to disburse funds, but an act of Congress forced the Fed to reveal how it lent the money. The TALF began operation in March 2009 and was closed on June 30, 2 ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Commercial Paper Funding Facility
Commercial Paper Funding Facility (CPFF) was a system created by the United States Federal Reserve Board during the 2008 financial crisis to improve liquidity in the short-term funding markets. It was reauthorized in March 2020 in reaction to the financial impact of the COVID-19 pandemic, including the 2020 stock market crash. The CPFF ceased purchasing commercial paper on March 31, 2021. First iteration (2008–2010) The CPFF was created on October 27, 2008 and funded a special purpose vehicle (SPV) that purchased three-month unsecured and asset-backed commercial paper (CP) from eligible issuers. This resulted in greater availability of credit for firms doing business. It worked under the aegis of the Federal Reserve Bank of New York where the NY Fed finances the purchase of highly rated unsecured and asset-backed commercial paper from eligible issuers via eligible primary dealers. The facility expired February 1, 2010. The final CP purchased matured on April 26, 2010. All CP ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Commercial Paper
Commercial paper, in the global financial market, is an Unsecured debt, unsecured promissory note with a fixed Maturity (finance), maturity of usually less than 270 days. In layperson terms, it is like an "IOU" but can be bought and sold because its buyers and sellers have some degree of confidence that it can be successfully redeemed later for cash, based on their assessment of the credit risk, creditworthiness of the issuing company. Commercial paper is a Money market, money-market security (finance), security issued by large corporations to obtain funds to meet short-term debt obligations (for example, payroll) and is backed only by an issuing bank or company promise to pay the face amount on the maturity date specified on the note. Since it is not backed by Collateral (finance), collateral, only firms with excellent credit ratings from a recognized credit rating agency will be able to sell their commercial paper at a reasonable price. Commercial paper is usually sold at a di ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility
The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics (particularly the panic of 1907) led to the desire for central control of the monetary system in order to alleviate financial crises. Although an instrument of the U.S. government, the Federal Reserve System considers itself "an independent central bank because its monetary policy decisions do not have to be approved by the president or by anyone else in the executive or legislative branches of government, it does not receive funding appropriated by Congress, and the terms of the members of the board of governors span multiple presidential and congressional terms." Over the years, events such as the Great Depression in the 1930s and the Great Recession during the 2000s have led to the expansion of the roles and responsibili ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
