The fed has decided to cut the emergency lending to big wall street banks in financial trouble. Before, in sever economic crisis, the federal government would lend money to banks under threat of bankruptcy in order to keep their assets and such there. But it's always risky to do that, because it's never guaranteed that the bank will be able to pay back the government, so to prevent that risk, the government has made a rule that restricts their lending. But of course there are loopholes, loopholes that many wish to see closed to prevent further economic difficulty.
The dangers of the banking system have existed since our country's outset, and financial difficulty has always plagued us, such as the panic of 1857, or the Great Depression, where banks going bankrupt caused the biggest financial depression yet seen, or the recession that happened recently. In fact, it was economic strife in 2010 that spurred on a series of economic reforms, of which these restrictions are part of.
http://money.cnn.com/2015/11/30/news/economy/fed-adopts-rule-to-end-too-big-to-fail/index.html
No comments:
Post a Comment