Fed Takes Steps to Prevent Future Bailouts

The Federal Reserve Board has taken steps to prevent a repetition of the bailouts of AIG and Bear Stearns.  The Fed would still have the ability to bailout firms in a “broad-based” scenario in which at least five firms receive loans.  These loans, however, can only be made at the penalty rate, which is significantly higher than the market rate.  These changes were made after Senator Elizabeth Warren complained that an earlier proposal still gave regulators the ability to hand out “back-door bailouts.”  http://finance.yahoo.com/news/fed-adopts-emergency-lending-limits-144953267.html

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