Posts Tagged ‘ What Have We Learned? ’
The laws that encouraged high-risk lending to homeowners are still in place, and Fannie Mae and Freddie Mac are still doing their best to subsidize home purchases by individuals who are financially unprepared to meet their obligations. The risks of this policy are compounded by the Fed’s decision to allocate credit on a grand scale throughout the economy. Read more
As we discuss more fully in Chapter 20 , the latest recession confirms the pivotal role that the Federal Reserve can play when there is a financial panic. By acting as a lender of last resort, the Fed has the capacity to stave off economy-wide financial meltdowns. This was the role originally intended for the Fed back in 1913, and one that it failed to perform in 1929–1933. Read more