“Fed Aided At Least 111 Banks That Later Failed” – Boston Globe
“The loans, made through the so-called discount window, transformed a little-used program for banks that run low on cash into a source of long-term financing for troubled institutions, some of which borrowed regularly from the Fed for more than a year.
The central bank took little risk in making the loans, protecting itself by demanding large amounts of collateral. But propping up failing banks can increase the eventual cleanup costs for the Federal Deposit Insurance Corp. because it keeps struggling banks afloat, allowing them to get even deeper in debt. It also can clog the arteries of the financial system, tying up money in banks that are no longer making new loans.” Read more.
“Fed Aided At Least 111 Banks That Later Failed”
Binyamin Appelbaum and Jo Craven McGinty
The Boston Globe, April 5, 2011.
Image by m_bartosch / FreeDigitalPhotos.net.
