Government interventions in economic emergencies / Pablo Sastre, editor.

Format:

Book

Contributor:

Sastre, Pablo.

Series:

Economic issues, problems and perspectives series.

Economic issues, problems and perspectives series

Language:

English

Subjects (All):

Finance--Government policy--United States.

Finance.

Financial crises--Government policy--United States.

Financial crises.

Global Financial Crisis, 2008-2009.

Monetary policy--United States.

Monetary policy.

United States--Economic policy--2009-.

United States.

Physical Description:

1 online resource (293 p.)

Edition:

1st ed.

Place of Publication:

New York : Nova Science Publishers, c2010.

Language Note:

English

Summary:

There is no precise definition of "financial crisis", but a common view is that disruptions in financial markets rise to the level of a crisis when the flow of credit to households and businesses is constrained and the real economy of goods and services is adversely affected. Since mid-2007, governments have tried with limited success to keep downturn in U.S. sub-prime housing from developing into such a crisis. In response to the ongoing financial turmoil, the federal government intervened financially with private corporations on a large scale that resulted in the government receiving significant debt and equity considerations three times since the beginning of 2008. On October 3rd 2008, the Troubled Assets Relief Program (TARP) was signed into law, giving Treasury the option of purchasing or insuring up to $700 billion of assets from financial firms. This book looks at the global financial crisis here and abroad and the government interventions to stave off economic emergencies. This book consists of public domain documents which have been located, gathered, combined, reformatted, and enhanced with a subject index, selectively edited and bound to provide easy access.

Contents:

Intro

GOVERNMENT INTERVENTIONS IN ECONOMIC EMERGENCIES

CONTENTS

PREFACE

AUCTION BASICS: BACKGROUND FOR ASSESSING PROPOSED TREASURY PURCHASES OF MORTGAGE-BACKED SECURITIES

SUMMARY

DUTCH AUCTIONS AND REVERSE DUTCH AUCTIONS

Quality Differences of Troubled Assets Presents Challenges for Auctions

Adverse Selection and Firms' Asset Holdings

Reputational Issues and Participation

Sequencing Issues

Will Auctions Unlock Credit Markets?

Costs and Risks to Taxpayers

AUCTION DESIGN

Single-Unit Auctions

Why are Treasury Auctions Called Dutch Auctions?

Imperfect Information: Common Values and the Winner's Curse

Revenue Equivalence

Multiple-Unit Auctions

Manipulation and Demand-Reduction Strategies

Complementarities

Dutch Auctions with Multiple Units

Uniform-Price vs. Individual Price Auctions

End Notes

BANKING AND SECURITIES REGULATION AND AGENCY ENFORCEMENT AUTHORITIES

BACKGROUND

AN OVERVIEW OF BANKING AND SECURITIES REGULATION

Banking

Securities

MAJOR ENFORCEMENT-RELATED STATUTES

ORGANIZATION OF ENFORCEMENT PROGRAMS

COMPARISON OF ENFORCEMENT AND COMPLIANCE TOOLS

FOR FURTHER READING

BEAR STEARNS: CRISIS AND "RESCUE" FOR A MAJOR PROVIDER OF MORTGAGE-RELATED PRODUCTS

INTRODUCTION

BACKGROUND ON BEAR STEARNS

MORTGAGE-BACKED SECURITIES

BEAR STEARNS AND THE INITIAL FED "RESCUE"

JP MORGAN INITIALLY AGREES TO ACQUIRE BEAR STEARNS WITH FED ASSISTANCE

THE AMENDED BUYOUT OFFER

THE ALTERED TERMS FOR THE FED AND THE DEBATE OVER MORAL HAZARD AND SYSTEMIC RISK

RELATED CONGRESSIONAL CONCERNS

CONTAINING FINANCIAL CRISIS

THE UNDERLYING FINANCIAL PROBLEMS.

Complex Finance: The House of Cards

SIVs

Metro's Credit Enhancement

What Makes a Financial Crisis?

GOVERNMENT INTERVENTIONS

Open Market Operations and Monetary Policy

The Discount Window

Term Auction Facility (TAF)

Treasury's "Super-SIV" Proposal

Provision of New Capital to Financial Institutions

Bear Stearns

Fannie Mae and Freddie Mac

AIG

The 700 Billion Troubled Assets Relief Program (P.L. 110-343)

Increases in Government Guarantees and Insurance

Commercial Paper

Citigroup

POLICY ISSUES: ARE REGULATORS' TOOLS ADEQUATE?

Information

Speculation

THE COST OF GOVERNMENT FINANCIAL INTERVENTIONS, PAST AND PRESENT

WHERE HAS THE MONEY COME FROM?

THE COST OF FINANCIAL INTERVENTIONS

RECENT FINANCIAL INTERVENTIONS

Troubled Assets Relief Program (TARP)

American International Group (AIG)

DANGERS FROM THE POLITICAL ALLOCATION OF CAPITAL

INFORMATION PROBLEMS

UNRESPONSIVENESS

BIAS AGAINST ENTREPRENEURSHIP AND INNOVATION

BIAS FOR CONSTITUENTS

RESOURCE DIVERSION

CORRUPTION AND CRONY CAPITALISM

CONCLUSION

APPENDIX: FEDERAL RESERVE ACTIONS

DON'T SPEND TO EXCESS IN THE NAME OF KEYNESIANISM

KEYNESIAN FISCAL POLICY

HISTORY MISINTERPRETED

GOVERNMENT'S ROLE

FEDERAL STIMULUS SO FAR

EMERGENCY ECONOMIC STABILIZATION ACT: PRELIMINARY ANALYSIS OF OVERSIGHT PROVISIONS

Oversight and Audit Mechanisms

THE FINANCIAL STABILITY OVERSIGHT BOARD AND THE CONGRESSIONAL OVERSIGHT PANEL

Placement within the Government

Responsibilities

Access to Information

Membership

Leadership

Pay for Members

Meetings/Quorum

Staffing/Consultants

Reports by the Entities

Reports to the Entities.

Funding

Termination

THE SPECIAL INSPECTOR GENERAL FOR THE TARP AND THE COMPTROLLER GENERAL'S ROLE IN THE ACT

When Audits Begin

Obligation of the TARP to Respond to Audits

Staffing/Contracting

Reports

Funding

CONCLUDING OBSERVATIONS

Overlapping Responsibilities

Possible Additions to Reporting Requirements

A Delayed Start for the COP and the Special IG

Possible Reassessment of Oversight Mechanisms

Certain Issues Are Unclear

Oversight and the Balance of Power

STATEMENT OF PETER R. ORSZAG, FEDERAL RESPONSES TO MARKET TURMOIL, BEFORE THE COMMITTEE ON THE BUDGET U.S. HOUSE OF REPRESENTATIVES

THE TROUBLED ASSET RELIEF ACT OF 2008

THE BUDGETARY TREATMENT OF THE PROPOSAL

DETERMINING A PURCHASE PRICE FOR TROUBLED ASSETS

FINANCIAL MARKET AND OTHER EFFECTS OF THE PROPOSAL

ALTERNATIVES TO THE TREASURY'S PROPOSAL

THE U.S. FINANCIAL CRISIS: LESSONS FROM CHILE

Untitled

THE CHILEAN BANKING CRISIS OF 1981-84

THE GOVERNMENT RESPONSE

Debt Restructuring

Restoring Bank Balance Sheets

Restructuring Distressed Banks

POSSIBLE LESSONS FROM CHILE'S BANK CRISIS

THE U.S. FINANCIAL CRISIS: LESSONS FROM JAPAN

NET COST OF BAILOUTS

LESSONS LEARNED

THE U.S. FINANCIAL CRISIS: LESSONS FROM SWEDEN

DEREGULATION

THE FINANCIAL CRISIS

LESSONS LEARNED FROM SWEDEN'S EXPERIENCE

FINANCIAL MARKET INTERVENTION

CURRENT CONCERNS

What, If Anything, Is Wrong with the Financial System?

When Did Trouble in the Financial Markets Start?

What Caused Financial Market Turmoil?

If 97% of Borrowers Are Still Current on Their Mortgage, Why Is the Financial Turmoil So Large?.

Where Are the Problem Loans Located?

Why Did the Financial Shocks Happen?

Who Is Affected by the Financial Turmoil?

How Have Policymakers Responded to Financial Turmoil?

Why Has the Federal Reserve Not Restored Order in Financial Markets?

What Does Treasury Propose to Do?

What Were Some of the Additions and Deletions to the Proposal Offered in H.R. 3997?

FUTURE OF FINANCIAL SERVICES HEARING

TESTIMONY BY SECRETARY HENRY M. PAULSON, JR. BBEFORE THE HOUSE COMMITTEE ON FINANCIAL SERVICES HEARING ON TURMOIL IN U.S. CREDIT MARKETS: RECENT ACTIONS REGARDING GOVERNMENT SPONSORED ENTITIES, INVESTMENT BANKS AND OTHER FINANCIAL INSTITUTIONS

GOVERNMENT INTERVENTIONS IN FINANCIAL MARKETS: ECONOMIC AND HISTORIC ANALYSIS OF SUBPRIME MORTGAGE OPTIONS

POLICY ISSUES

A BRIEF OVERVIEW OF SUBPRIME DELINQUENCY AND DEFAULT

THE NATURE OF THE SUBPRIME RESET PROBLEM

SELECTED PREVIOUS GOVERNMENT INTERVENTIONS

Home Owners' Loan Corporation

Contemporary Issues

Results

Application to Subprime Mortgage Restructuring

Continental Illinois

Savings and Loans

Brady Bonds

STATEMENT BY SECRETARY HENRY M. PAULSON, JR. ON COMPREHENSIVE APPROACH TO MARKET DEVELOPMENTS

REMARKS BY SECRETARY HENRY M. PAULSON, JR. ON FINANCIAL RESCUE PACKAGE AND ECONOMIC UPDATE

CURRENT STATE OF GLOBAL FINANCIAL SYSTEM

HOUSING AND MORTGAGE FINANCE

IMPLEMENTING THE FINANCIAL RESCUE PACKAGE

CAPITAL PURCHASE PLAN

PRIORITIES FOR REMAINING TARP FUNDS

FURTHER STRATEGIES

GLOBAL CHALLENGE

CONCLUSION.

PROPOSAL TO ALLOW TREASURY TO BUY MORTGAGE-RELATED ASSETS TO ADDRESS FINANCIAL INSTABILITY

THE DRAFT PROPOSALS

Purchase of Mortgage-Related Assets

Debt Limit

Definition of Troubled Asset

Authority to Take Action

Restrictions

Factors to Guide Intervention

Management of Mortgage-Related Assets

Loss Mitigation and Loan Modification

Sunset

Reports to Congress

FREQUENTLY ASKED QUESTIONS

Does the Proposal Include Provisions to Help Home Owners Facing Foreclosure?

Is the Program Limited to Home Mortgages?

What Price Will Treasury Pay for the Assets It Purchases?

What Happens to Funds the Treasury Receives from Disposing of the Assets?

What Is the Potential Cost of Bad Mortgage-Related Debt?

What Role Did Housing Play in Financial Turmoil?

How Did Financial Markets Magnify the Effects of Mortgage Defaults?

How, If At All, Could Financial Turmoil Affect the Wider Economy If Nothing Is Done?

How, If At All, Could Intervention in Mortgage-Related Securities Markets Calm Financial Markets?

What Is the Rationale for Acting Now?

How Did Interest Rate Spreads Indicate A Sudden Loss of Confidence?

Couldn't the Same Assets Be Purchased through Fannie Mae and Freddie Mac Now That They Are in a Conservatorship Backed by the Treasury?

THE RESOLUTION TRUST CORPORATION: HISTORICAL ANALYSIS

THE ENACTMENT OF FIRREA AND THE BEGINNINGS OF THE RTC

THE STRUCTURE OF THE RTC

Equity Partnerships

Commercial Mortgages and Securitization

ECONOMIC SLOWDOWN: ISSUES AND POLICIES

THE CURRENT STATE OF THE ECONOMY

Is Additional Fiscal Stimulus Needed?

STIMULUS PROPOSALS ENACTED AND CONSIDERED

Preliminary Evidence on the Rebates' Economic Effects

Business Tax Incentives

Housing Provisions.

Extending Unemployment Benefits.

Notes:

Description based upon print version of record.

Includes bibliographical references and index.

ISBN:

1-61209-408-2

OCLC:

699510156