Study by The Fed exonerates The Fed's crisis-era bailouts

[stu2002]

This Is Good Enough for Me

(Reuters) - A study by economists at one of the regional Federal Reserve banks has found that the U.S. central bank didn't break any laws in its handling of the 2007-09 U.S. financial crisis, and that, in fact, it handled that crisis better than the savings and loan collapse of the 1980s.


The Federal Reserve had attracted scorn when it loaned hundreds of billions of dollars to troubled banks during the 2007-09 crisis, with some critics suggesting the bailout broke the law.

"The authors find no evidence that the Federal Reserve ever exceeded statutory limits during the recent financial crisis, recession, and recovery," said the study by the St. Louis Fed bank, which sought to find out whether the Fed had violated "the letter or spirit of the law" by lending to undercapitalized banks.

The financial crisis was, in part, brought on by aggressive securitization by financial institutions, lax regulations, and a bursting of the subprime mortgage-market bubble in 2007.

At the height of the crisis - which spread to international markets and sparked a brutal global recession - the Fed took unprecedented emergency actions well beyond its traditional use of interest rates to backstop both banks and the market.

http://finance.yahoo.com/news/study-...182328844.html