size_of_light
18-10-2008, 07:32 PM
Quietly, insiders are perusing an obscure paper by Fed staffers David Small and Jim Clouse. It explores what can be done under the Federal Reserve Act when all else fails.
Section 13 (3) allows the Fed to take emergency action when banks become "unwilling or very reluctant to provide credit". A vote by five governors can - in "exigent circumstances" - authorise the bank to lend money to anybody, and take upon itself the credit risk. This clause has not been evoked since the Slump.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/2821629/Crisis-may-make-1929-look-a-%27walk-in-the-park%27.html
Section 13 (3) allows the Fed to take emergency action when banks become "unwilling or very reluctant to provide credit". A vote by five governors can - in "exigent circumstances" - authorise the bank to lend money to anybody, and take upon itself the credit risk. This clause has not been evoked since the Slump.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/2821629/Crisis-may-make-1929-look-a-%27walk-in-the-park%27.html