Topic: Financial crisis research

Description: [?]

Preferred language style: English (U.S.)

ECO 4223 – Spring Term 2010
Triple-Homework (worth three homework assignment grades) due Thursday,
April 1, 2010
The financial crisis of the last few years was highlighted by the
failures of Bear Stearns, Lehman Brothers, and the collapse of scores
of commercial banks in the U.S. This crisis has impacted the public’s
confidence in banks, as well as the banking system of the United
States.
Your task is to research the crisis, including the events and
government agency (especially U.S. Treasury, F.D.I.C., and Federal
Reserve) actions from 2004 to the present. Explain the causes of the
crisis, the government intervention, and the effects of that
intervention on the economic agents involved – the non-bank public,
the banks, insurance companies, and investment banks. In a
well-organized, typewritten essay with minimum length three pages
(double-spaced, with 1” margins all around; 12 point font, Times New
Roman), be sure your essay addresses the following questions:
• Why did the banks get into this perilous state?
• Did the Federal Reserve waste too much time worrying about “moral
hazard” and not enough time working out a solution to the impending
banking crisis?
• Why should the taxpayer bail-out bankrupt banks?
• Why not just let the bad banks go bust?
• What would happen if the problem banks – big and small – were
allowed to collapse?
• What can be done to ensure taxpayers do not end up footing big pay
packets for bankers?
• Why not nationalize all the banks?
• Are the risks of such a crisis happening risks that will always be
found in banking, or are the risks having more to do with the
regulatory system?
• Does the current regulatory system need to be torn up?