Homework Question on Federal Response to the Financial Crisis
- Write a one page summery of Ben Bernanke Lecture number 3 At George Washington University “The Federal Reserve’s Response to the Financial Crisis”.
- Needs to show a clear understanding of what this lecture is about and highlight all the major points. Here is a link to it https://www.youtube.com/watch?v=w-
Homework Answer on Federal Response to the Financial Crisis
The Federal response to the Financial Crisis Lecture 3 by Ben Bernanke argues that the main responsibilities of central banks include financial and economic stability. He centers on how the central bank provides short-term loans to institutions and markets to calm their financial panics. For borrowers to avoid being stuck, they should consider the prices of the markets, which will help them refinance.
Fannie Mae and Freddie Mac are important in the public sector. They have shareholders on board and they act as intermediaries between the originator of the mortgage and the holder of the mortgage. Fannie Mae and Freddie Mac pioneered the securitization to get funding for the mortgages when they go bad and they sell them to investors. Besides selling the mortgage facilities, they also bought unknown accounts of large amounts of mortgages, both the loans and from private sectors and this made their situation worse since some of the mortgages were not insured and were vulnerable .
Intense pressure infiltrated in the Big Financial Firms in 2008 in the United States, such as, “Washington Mutual Bank Closed by regulators, acquisition by JP Morgan Chase announced, September 25” (21). Lessons learnt from the Great Depression include a financial panic and a monetary policy that is highly accommodating.