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WASHINGTON - The Federal Reserve was scrambling to prevent a "contagion" from infecting the nation's financial system when it took unprecedented actions to back a Bear Stearns rescue package and provide emergency loans to big Wall Street firms.
The Federal Reserve released documents Friday providing insights into its private deliberations in March that led to those controversial decisions. The Fed's actions came at a time when credit and financial problems were intensifying, thr
Fed Chairman Ben Bernanke and his colleagues initially moved on March 14 to provide temporary emergency financing to investment bank Bear Stearns Cos. through an arrangement with JP Morgan Chase & Co. Two days later as the investment bank teetered on the brink of bankruptcy, the Fed agreed to provide backing for up to $30 billion of a deal where JP Morgan would take over the troubled company.
However, Bernanke has defended the actions and in appearances on Capitol Hill has said he doesn't believe taxpayers will suffer any losses.
Originally posted by TruthWithin
reply to post by Maxmars
I totally agree, but just to play devil's advocate, isn't it necessary to prevent things from getting worse? In the financial world, wouldn't Bear Sterns have more weight because they account for billions?
[edit on 27-6-2008 by TruthWithin]