US Credit Crisis and Fed Response

US Credit Crisis and Fed’s Response Presentation By: Giorgi Nadareishvili Giorgi Gabatashvili Guram Shvangiradze Ilia Imerlishvili

Table of Contents ,[object Object],[object Object],[object Object],[object Object]

Banking System in US ,[object Object]

FED’s Functions ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

About the crisis… ,[object Object],[object Object],[object Object]

The bubble burst… ,[object Object],[object Object],[object Object],[object Object]

During 2007, nearly 1.3 million U.S. housing properties were subject to foreclosure activity, up 79% from 2006. Major banks and other financial institutions around the world have reported losses of approximately US$435 billion as of 17 July 2008. During the week of September 14, 2008 the crisis accelerated, developing into a global financial crisis.resulting in the bankrupcy of some of the world’s biggest financial institutes..

Impact of Sub Prime Crisis in USA ,[object Object],[object Object],[object Object]

Impact of Sub Prime Crisis in USA ,[object Object],[object Object],[object Object],[object Object]

Citigroup ,[object Object],[object Object]

What Steps Has the Federal Reserve Taken to Address the Credit Crisis? ,[object Object],[object Object],[object Object],[object Object],[object Object]

What Steps Has the Federal Reserve Taken to Address the Credit Crisis? ,[object Object],TAF was the first new facility - December 12, 2007 Fed allows banks to annonymously borrow money from the TAF.

What Steps Has the Federal Reserve Taken to Address the Credit Crisis? ,[object Object],The Term Securities Lending Facility (TSLF) was the second new facility created by the Fed. Fed established the TSLF to allow primary dealers to give their troubled assets to the Federal Reserve Bank of New York in exchange for more liquid Treasury Securities.

What Steps Has the Federal Reserve Taken to Address the Credit Crisis? ,[object Object],PDCF allowed primary dealers to borrow directly from the Fed - like a bank would borrow from the discount window.

What Steps Has the Federal Reserve Taken to Address the Credit Crisis? The Commercial Paper Funding Facility (CPFF) - October 7, 2008 To prevent the U.S. economy from coming to a grinding halt due to lack of cash, the Fed established the CPFF to buy short-term commercial paper from major corporations. ,[object Object]

What Steps Has the Federal Reserve Taken to Address the Credit Crisis? ,[object Object],Fed has temporarily removed all limits on its swap lines with major central banks in Europe—the Bank of England (BOE), the European Central Bank (ECB), the Swiss National Bank (SNB) and others—and in other parts of the world.

Other Responses ,[object Object],[object Object]

US Credit Crisis and Fed Response

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US Credit Crisis and Fed Response