Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Friday, June 6, 2008

Two Fed Reserve Presidents Warn About Lending Money to Investment Firms

The debate over the Federal Reserve's decision to bail out Bear Stearns and lend money to securities firms was renewed as two Federal Reserve Bank Presidents independently warned of adverse consequences from the decision.  Jeffrey Lacker, President of the Federal Reserve Bank in Richmond Virginia, said in a speech in London that it might induce greater risk-taking; Charles Plosser, President of the Federal Reserve Bank in Philadelphia, warned of the risk of "sowing the seeds of the next crisis."  NYTimes, Two Fed Bank Presidents Warn About Lending to Securities Firms; WSJ, Insider Joins Critics of the Fed, Faulting Credit-Crisis Programs.

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