Problem 12
What is TARP and how was it funded? What is meant by the term "lender of last resort" and how does it relate to the financial crisis of \(2007-2008 ?\) How do government and Federal Reserve emergency loans relate to the concept of moral hazard?
Problem 13
What are the major categories of firms that make up the U.S. financial services industry? Are there more or fewer banks today than before the start of the financial crisis of \(2007-2008 ?\) Why are the lines between the categories of financial firms even more blurred than they were before the crisis? How did the Wall Street Reform and Consumer Protection Act of 2010 try to address some of the problems that helped cause the crisis?
Problem 14
A firm enters bankruptcy when it misses a debt payment. So does being insolvent imply being bankrupt? Explain. And why is the Fed reluctant to distinguish between solvent and insolvent firms during a financial crisis?
