When the Fed helped JPMorgan Chase to rescue Bear Stearns, it sent a signal to the markets—a kind of “No Bank Left Behind” Act. If the Fed was willing to save an investment bank, without any retail depositors, then the system would not be brought down by a "plumbing problem", such as the collapse of a counterparty in the derivatives market.
Saturday, May 03, 2008
QOTD
From the May 3-9 Economist :
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