Understanding the “Bailout”
In recent months, the United States financial system has been rocked to its foundation. Bear Stearns, Lehman Brothers and AIG – all major financial institutions that collapsed virtually overnight. On an almost daily basis the Federal Reserve and Treasury Department have desperately struggled to stem the tide, pumping trillions of dollars of liquidity into frozen financial and credit markets. And recently Congress passed a $700 billion bailout package to purchase toxic securities from banks. The pace of changing has been stunning and deeply unsettling. This four part series will provide you a practical guide to the changes in the financial system, from the massive new Congressional bailout to the implosion of the housing sector, to selling toxic assets to the government and new changes in banking regulation.
SEGMENT 1: Understanding the “Bailout”: An Overview of Sprawling Changes to Banking, Accounting and Real Estate
- Background of crisis: Collapse of the housing market, growth of collateralized debt obligations, and rising defaults
- Congressional Action: Detailed review of Emergency Economic Stabilization Act of 2008
- Federal Reserve Activity: interest rates, new lending facilities, commercial paper intervention, loans to industry
- SEC Activity: rules changes and enforcement activity
- Recapitalization of banks across the nation
John L. Douglas, Paul, Hastings, Janofsky & Walker, LLP, Washington, D.C. & Atlanta Mr. Douglas concentrates his practice in the regulation of financial institutions, in mergers and acquisitions and other transactions involving banks and thrifts. He formerly served as General Counsel of the Federal Deposit Insurance Corporation, during a period of unprecedented stress on the financial system and assisted in the organization of the Resolution Trust Corporation.
