Table Of ContentFirst Responders
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| LIST OF CONTRIBUTORS |
The authors of this book served under Presidents George W. Bush and Barack
Obama at the Board of Governors of the Federal Reserve System (Federal Re-
serve Board), the Federal Deposit Insurance Corporation, the Federal Reserve
Bank of New York, and the U.S. Department of Trea sury during the crisis years.
SCOTT G. ALVAREZ (Nonbanks, Legal) was general counsel of the
Federal Reserve Board.
MICHAEL BARR (Housing) was assistant secretary of the Trea sury for
financial institutions under Secretary Timothy F. Geithner.
THOMAS C. BAXTER, JR. ( Legal) was general counsel and executive vice
president of the Federal Reserve Bank of New York.
BEN S. BERNANKE (Editor; Introduction) was chairman of the Federal
Reserve Board from 2006 to 2014.
TIM CLARK (Banks II) was se nior adviser, Division of Banking Supervision
and Regulation of the Federal Reserve Board.
BRIAN DEESE (Autos) was special assistant to President Obama for
economic policy.
WILLIAM C. DUDLEY (Nonbanks) was president of the Federal Reserve
Bank of New York from 2009 to 2018, and before that, system open market
account man ag er to the Federal Open Market Committee and head of the
markets group at the Federal Reserve Bank of New York.
WILLIAM B. EN GLISH (Classic Lender of Last Resort) was deputy direc-
tor, Division of Monetary Affairs, Federal Reserve Board, and l ater became
director.
JASON FURMAN (Fiscal Policy) was deputy director of the White House
National Economic Council and deputy assistant to President Obama for
economic policy from 2009 to 2010. He later served as chairman of Obama’s
Council of Economic Advisers.
TIMOTHY F. GEITHNER (Editor; Introduction) was president of the
Federal Reserve Bank of New York from 2003 to 2009 and the 75th secretary
of the Trea sury from 2009 to 2013 under President Obama.
ROBERT F. HOYT ( Legal) was general counsel of the Department of the
Trea sury under both Secretaries Henry M. Paulson, Jr., and Geithner.
DAN JESTER (GSEs, Banks I, Autos) was a contractor for the Department
of the Trea sury u nder Secretary Paulson.
MATTHEW KABAKER (GSEs, Banks II) was se nior adviser to Trea sury
Secretary Geithner and deputy assistant secretary, capital markets.
NEEL T. KASHKARI (Housing, TARP) was assistant secretary of Trea sury
for international economics and development under Secretary Paulson and
later interim assistant secretary of Trea sury for financial stability under
Secretaries Paulson and Geithner.
DONALD KOHN (Monetary Policy) was the vice chairman of the Federal
Reserve Board from 2006 to 2010.
MICHAEL H. KRIMMINGER (Debt Guarantees) was special adviser for
policy to Chairman Sheila Bair, deputy to the chairman for policy, and
general counsel of the Federal Deposit Insurance Corporation.
ANDREAS LEHNERT (Housing) was chief, House hold and Real Estate
Finance Section, and assistant director, Division of Research and Statistics,
at the Federal Reserve Board.
J. NELLIE LIANG (Editor; Nonbanks, Outcomes) was associate director,
Division of Research and Statistics, at the Federal Reserve Board, and later
became director of the Division of Financial Stability.
LORIE LOGAN (Novel Lender of Last Resort) was vice president and
director of Trea sury markets, Federal Reserve Bank of New York.
CLAY LOWERY (International) was assistant secretary of Trea sury for
international affairs under Secretary Paulson.
TIMOTHY G. MASSAD (TARP) was in the Office of Financial Stability from
May 2009 to June 2014, first as chief counsel and then as assistant secretary
of Trea sury for financial stability under Secretaries Geithner and Jacob Lew.
MARGARET M. McCONNELL (Outcomes) was deputy chief of staff for
policy, Federal Reserve Bank of New York.
PATRICIA C. MOSSER (Classic Lender of Last Resort) was se nior vice
president, markets group, Federal Reserve Bank of New York, and also the
acting system open market account man ag er for the Federal Open Market
Committee in 2009.
DAVID NASON (Banks I) was assistant secretary of Trea sury for financial
institutions under Secretary Paulson.
WILLIAM NELSON (Novel Lender of Last Resort) was associate director,
Division of Monetary Affairs, Federal Reserve Board.
JEREMIAH NORTON (GSEs, Banks I) was deputy assistant secretary of
Trea sury for financial institutions under Secretary Paulson.
PATRICK PARKINSON (Novel Lender of Last Resort) was deputy director,
Division of Research and Statistics, Federal Reserve Board.
HENRY M. PAULSON, JR. (Editor; Introduction) was the 74th secretary
of the Trea sury from 2006 to 2009 under President George W. Bush.
LEE SACHS (GSEs, Banks II) was counselor to Trea sury Secretary Geithner.
BRIAN SACK (Monetary Policy) was system open market account man ag er
for the Federal Open Market Committee and head of the markets group at
the Federal Reserve Bank of New York from 2009 to 2012.
STEVEN M. SHAFRAN (Money Market Fund Guarantees, Autos) was
se nior adviser to Trea sury Secretary Paulson.
NATHAN SHEETS (International) was director of the division of interna-
tional finance at the Federal Reserve Board.
PHILLIP SWAGEL (Housing, Outcomes) was assistant secretary of Trea-
sury for economic policy under Secretary Paulson.
EDWIN (TED) TRUMAN (International) was counselor to Trea sury
Secretary Geithner.
JAMES R. WIGAND (Triage & Resolution) was deputy director of the
Federal Deposit Insurance Corporation Division of Resolutions and Receiver-
ships and served as the FDIC’s chief resolution strategist during the crisis.
FIRST
RESPONDERS
INSIDE THE U.S. STRATEGY
FOR FIGHTING THE 2007–2009
GLOBAL FINANCIAL CRISIS
| | | | | | | | | | | | | | | | | | | | | | | | |
EDITED BY
BEN S. BERNANKE, TIMOTHY F. GEITHNER,
AND HENRY M. PAULSON, JR.,
WITH J. NELLIE LIANG
| | | | | | | | | | | | | | | | | | | | | | | | |
NEW HAVEN AND LONDON
This book is the result of a proj ect supported by the Brookings Institution’s Hutchins
Center on Fiscal & Monetary Policy, David Wessel, director, and the Yale Program on
Financial Stability at the Yale School of Management, Andrew Metrick, director.
Copyright © 2020 by Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr.
All rights reserved.
This book may not be reproduced, in w hole or in part, including illustrations, in any form
(beyond that copying permitted by Sections 107 and 108 of the U.S. Copyright Law and
except by reviewers for the public press), without written permission from the publishers.
Yale University Press books may be purchased in quantity for educational, business, or
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sales@yaleup . co . uk (U.K. office).
Designed by Sonia L. Shannon
Set in Minion Pro and Gotham Display type by Westchester Publishing Services.
Printed in the United States of Amer i ca.
Library of Congress Control Number: 2019940872
ISBN 978-0-300-24444-1 (hardcover: alk. paper)
A cata logue rec ord for this book is available from the British Library.
This paper meets the requirements of ANSI/NISO Z39.48-1992 (Permanence of Paper).
10 9 8 7 6 5 4 3 2 1
The views expressed in each chapter are strictly those of the author(s) and do not neces-
sarily represent the views of the Federal Reserve Board, the Federal Reserve Banks of New
York or Minneapolis, or any other organ ization or entity with which the authors may be
associated.
| CONTENTS |
LIST OF ILLUSTRATIONS | xi
LIST OF TABLES | xv
LIST OF ABBREVIATIONS | xvii
CHAPTER 1 The Financial Crisis and Its Lessons for the Future | 1
BEN S. BERNANKE, TIMOTHY F. GEITHNER,
AND HENRY M. PAULSON, JR.
CHAPTER 2 The Use and Effectiveness of Conventional Liquidity Tools Early
in the Financial Crisis | 49
WILLIAM B. EN GLISH AND PATRICIA C. MOSSER
CHAPTER 3 The Fed’s Novel Lender- of- Last- Resort Programs | 81
LORIE LOGAN, WILLIAM NELSON, AND PATRICK PARKINSON
CHAPTER 4 Nonbank Financial Institutions: New Vulnerabilities and
Old Tools | 113
SCOTT G. ALVAREZ, WILLIAM C. DUDLEY,
AND J. NELLIE LIANG
CHAPTER 5 The Legal Authorities Framing the Government’s Response | 144
SCOTT G. ALVAREZ, THOMAS C. BAXTER, JR.,
AND ROBERT F. HOYT
CHAPTER 6 Rescuing the Mortgage Giants | 171
DAN JESTER, MATTHEW KABAKER, JEREMIAH NORTON,
AND LEE SACHS
CHAPTER 7 Money Market Funds: Collapse, Run, and Guarantee | 193
STEVEN M. SHAFRAN
CHAPTER 8 Recapitalizing the Banking System | 208
DAN JESTER, DAVID NASON, AND JEREMIAH NORTON
