Just as I have finished a series about the moral hazards introduced into the financial system, it turns out that the 1,279 page “Wall Street Reform and Consumer Protection Act” of 2009 contains a clause that says the Federal Reserve has the right to provide as much as $4 trillion in emergency funding the next time Wall Street crashes. That is twice the amount that was used during this last bailout. The bill also makes sure to state that the government can back firms’ debts during a crisis.
The bill was passed by the house earlier this month, so I suggest we all get as comfortable as we can with the details.
