Related to the Making the Connection) Financial journalist James Stewart notes t
ID: 1104723 • Letter: R
Question
Related to the Making the Connection) Financial journalist James Stewart notes that in contrast to its actions with respect to companies had adequate collateral to guarantee repayment" Source James Stewart, Pointing a Finger at the Fed in the Lehman Disaster," New York Times, July 21, 2016 In "lending into continuing runs" the Fed Lehman Brothers, "the Fed did lend into continuing runs at both Bear Steams and ALG, although officials argued then that those additional |banks in order to avoid! |longer-term assets at 1. further | investor confidence, Why is the issue of whether Bear Steams and AIG held sufficient collateral important legally? O A. The Fed can only make loans to frms provided that the loan being made is secured by adequate colateral O B. Holdng sufficient capital does not have legal ramiscafons O C. wthout sufficient collateral they would be forced to declare bankruptcy. O D. without sufficient colateral, they would be in default on their loans All of the except ollowing might be reasons why the Fed dlid not lend to Lehman Brothers in the days betore its bankruptcy A. increasing moral hazard O B. Congressional cridicism over the Fed's handling of Bear Steam c. provisions the r ederal Reserve Act O D. the failure of Lehman Brothers would have little impact on the economy cick to select O Type here to searchExplanation / Answer
In lending into continuing run, the fed would provide additional Fund to banks in order to avoid default on long term assets at Current Rate, further avoid investor confidence.
Why is the issue of whether Bear Stearns and AIG held sufficient collateral important legally?
All of the following might be reason why the Fed did not lend to Lehman Brothers in the days before its bankruptcy, except: