Question

During the 2008 bailouts, the Federal Reserve and Treasury were able to turn profits on bank rescues, in today's economic climate with COVID-19 rates continuing to rise in many areas, some have argued that officials should not be concerned about recouping the Treasury's investment stating that if the Fed doesn't lose money, they weren't lending to borrowers who needed it. Agree or disagree and why?

Answer 1

Ans.

We do agree with this statement.

- Despite the fact that they may not bring about benefit, numerous government bailout-type interventions include almost no consumption of general income.

- In a few cases, the government basically may encourage private market arrangements without setting any government assets in danger.

- While the U.S. government started the bailout as a Federal Reserve-drove activity, any losses incurred would come out of the Treasury's funds. Similar government sponsored bailouts of non-governmental corporations occurred in the aircraft industry in 2001.

- While the Federal Reserve and the Department of the Treasury are separate entities, they work closely together. The partnership seeks to make a move at the large scale level, for instance, by addressing monetary weakness through financial stimulus, and at the smaller scale level, by saving bombing corporations to blunt the effect, their budgetary troubles would have on the economy.

- Similary in the current pandemic driven economic crisis it is imperative that bailouts are given,in this manner, the two entities seek to secure the money related soundness of the U.S. economy.