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Mar
16
Fed Bails Out Bear Stearns
Filed Under economy
The Fed has bailed out Bear Stearns because of fear that a systemic meltdown could occur in America’s financial markets otherwise.
The Fed bailout of Bear Stearns is an effort to help prevent the financial markets from tumbling, reports the New York Times.
Hoping to avoid a systemic meltdown in financial markets, the Federal Reserve on Sunday approved a $30 billion loan guarantee to engineer the takeover of Bear Stearns and announced an open-ended lending program for the biggest investment firms on Wall Street.
In a third move aimed at helping banks and thrifts, the Fed also lowered the rate for borrowing from its so-called discount window by a quarter of a percentage point, to 3.25 percent.
The moves amounted to a sweeping and apparently unprecedented attempt by the Federal Reserve to rescue the nation’s financial markets from what officials feared could be a chain reaction of defaults.
It’s pretty scary when “systemic meltdown” is being used anywhere near the words “financial markets” in news reports about America’s financial system.
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