In April, 2007, New Century Financial Company, the second largest subprime lending institution in the United States, filed for bankruptcy protection as a symbol, and the American subprime mortgage crisis officially kicked off. Since then, the crisis has intensified, a large number of institutions engaged in subprime mortgage business have gone bankrupt, major financial institutions have suffered huge losses, and the international financial market has been violently turbulent. The market predicts that the global losses related to subprime loans will reach10.5 trillion US dollars. Since 2008, 13 commercial banks in the United States have gone bankrupt. Among the top five investment banks in the United States, Bear Stearns was acquired by JPMorgan Chase, Merrill Lynch was acquired by Bank of America, Lehman Brothers filed for bankruptcy protection, and Morgan Stanley and Goldman Sachs also became bank holding companies. In response to the impact of the financial crisis, the U.S. Treasury and the Federal Reserve have successively issued a series of countermeasures, the frequency, scale, scope and intensity of which are rare in the history of the United States for nearly a hundred years. The unconventional measures taken by the Federal Reserve in response to the crisis and the large-scale credit crunch triggered by the US subprime mortgage crisis have severely hit market confidence. Although the Federal Reserve has continuously lowered the federal funds interest rate and rediscount interest rate, and applied the conventional monetary policy to the extreme, it still cannot stop the violent turmoil in the international financial market and the continuous slowdown of the US economy. To this end, the Fed has to choose various unconventional measures to increase market liquidity supply, expand credit scale and restore market confidence. (A) The new liquidity management method is to adjust the discount window loan policy. Since August 2007, the Federal Reserve has repeatedly adjusted its discount policy to encourage commercial banks with financial difficulties to borrow from the Federal Reserve. On August 17, 2007, the Federal Reserve lowered its discount rate by 50 basis points, so that the difference between its interest rate and the US federal funds rate was reduced from the initial 100 basis point to 50 basis points, and the loan period was extended to 30 days, which can be extended upon request. On March 18, 2008, the Federal Reserve lowered its discount rate by 75 basis points again, further reducing its discount rate and federal funds rate to 25 basis points, and extending the loan period to 90 days. The second is to launch a new financing mechanism. On 20071February 12, the Federal Reserve launched the Innovative Financing Mechanism (TAF) for qualified deposit financial institutions. In TAF, the Federal Reserve provides a 28-day mortgage through auction twice a month, and the interest rate is determined by the bidding process. Each TAF has a fixed amount, and the collateral is the same as the discount window loan. TAF is regarded as the greatest financial innovation of the Federal Reserve in recent 40 years, because it can effectively solve the liquidity problem in the interbank market by pre-determining the quantity and adopting market-oriented auction, without complicating the management of bank reserves and federal funds interest rates. On July 30, 2008, as a supplement to the 28-day TAF, the Federal Reserve launched the 84-day TAF to better alleviate the shortage of funds in the three-month short-term financing market. On September 29th, 2008, the Federal Reserve also indicated that it plans to launch two forward TAFs with a total amount of 1 1 month, and the time and duration will be determined after consultation with deposit institutions to ensure that market participants have sufficient funds before the end of the year. Since then, the total scale has expanded to 300 billion on October 6, 2008/kloc-0. The third is to activate the new securities lending mechanism. On March 1 1, 2008, the Federal Reserve launched another innovative liquidity support tool (TSLF). TSLF is an asset swap agreement, which is valid for 6 months. The Federal Reserve will replace the mortgage assets of the first-class securities firms with treasury bonds by auction and return them after the expiration. TSLF's counterparties are limited to primary securities dealers, mainly investment banks. Qualified mortgage assets that traders can provide include federal agency bonds and mortgage-backed securities and mortgage-backed securities (MBS) issued by federal agencies. Fourth, the credit instrument for primary dealers (PDCF) was launched, and the discount window was opened to primary dealers. After the Bear Stearns incident, in order to further alleviate the short-term downward pressure on the financial market, on March 17, 2008, the Federal Reserve decided to use its emergency loan power to activate PDCF, the essence of which is to open the discount window that is traditionally only open to commercial banks to eligible primary dealers (mainly investment banks) and provide overnight loans. Fifth, asset-backed commercial paper, namely money market liquidity tool (AMLF), is introduced to support the commercial paper market by supporting the money market. On September 19, 2008, in response to the Wall Street shock caused by the collapse of Lehman Brothers, a large number of investors withdrew their funds from the money market. The Federal Reserve announced the launch of AMLF to provide non-recourse loans to savings institutions and bank holding companies at a discount rate for them to purchase asset-backed commercial paper (MMMF) from the money market. At the same time, the Fed also plans to purchase discounted bills issued by federal agencies such as Fannie Mae, Freddie Mac and the Federal Housing Loan Bank directly from primary dealers to further support the smooth operation of the commercial paper market. Sixth, the Commercial Paper Financing Tool (CPFF) was launched to directly support the commercial paper market. On October 7th, 2008, the Federal Reserve announced the establishment of CPFF. The operation mechanism is to purchase three-month asset-backed commercial paper (ABCP) and high-rated unsecured commercial paper priced in US dollars directly from qualified commercial paper issuers through special purpose vehicles (SPV), and provide daily liquidity support for commercial paper issuers such as banks, large enterprises and local governments in the United States. Seventh, pay interest to the reserves of commercial banks. For a long time, neither the Federal Reserve nor the central banks of other major countries have paid interest on the statutory deposit reserve and excess reserve of commercial banks. Under the impact of the subprime mortgage crisis, in order to increase the loanable funds of commercial banks, on October 6th, 2008, the Federal Reserve announced to pay interest to the statutory deposit reserve and excess reserve of commercial banks. Among them, the interest paid to the statutory reserve is 10 basis point lower than the average target interest rate of the federal funds during the reserve deposit period, and the interest paid to the excess reserve is initially set to be 75 basis points lower than the minimum target interest rate of the federal funds during the reserve deposit period. (2) Direct assistance to financial institutions; Save the investment bank Bear Stearns. On March 14, 2008, Bear Stearns, the fifth largest investment bank in the United States, experienced a liquidity crisis. In order to rescue Bear Stearns, the Federal Reserve urgently approved a special deal between JPMorgan Chase and Bear Stearns, that is, the Federal Reserve of new york provided emergency funds to Bear Stearns through JPMorgan Chase to alleviate its liquidity shortage. Bear Stearns mortgaged its least liquid assets of $30 billion, and the Federal Reserve of new york provided it with 28 days of equal financing through JPMorgan Chase. This is the first time that the Federal Reserve has opened the discount window to non-bank financial institutions since the Great Depression in 1930s. Help Fannie Mae and Freddie Mac. On July 13, 2008, the Federal Reserve and the U.S. Treasury jointly announced that they would provide assistance to Fannie Mae and Freddie Mac in financial difficulties. Among them, the Federal Reserve will allow Fannie Mae and Freddie Mac to borrow directly from the discount window of the Federal Reserve in new york, provided that the Federal Reserve will play an advisory role in the capital adequacy ratio supervision and other prudential supervision of the two companies. In the US government's plan to take over Fannie and Freddie on September 7th, the Federal Reserve of new york became the financial agent for the US Treasury to provide credit loans to Fannie and Freddie. Save American International Group (AIG). Since the outbreak of the subprime mortgage crisis in the United States, AIG, as the main seller of the global credit default swap market, has been seriously affected by the sharp rise in market default risk. On September 16, 2008, the Federal Reserve announced that it would provide AIG with a high-interest mortgage loan of $85 billion, on the condition that the US government would buy 79.9% of AIG's shares and have the veto power to distribute dividends to other shareholders. On October 8, 2008/kloc-0, the Federal Reserve once again stated that the previous loan line of $85 billion to AIG had been exhausted, allowing AIG to use investment-grade fixed-income securities as collateral, and the Federal Reserve would once again grant AIG a loan line of $37.8 billion. Take joint international rescue operations. 20071February 12, 2008/March1day and September 18, 10/0 and 10. The main contents include: (1) Central banks of major countries inject liquidity into their own money markets through open market operations and other channels. (2) The Federal Reserve has established temporary currency swap arrangements with the central banks of major countries, and adjusted the swap term and scale according to the development of the situation. From 20081October 13, the Federal Reserve announced that it would temporarily increase the US dollar swap line with the European Central Bank, the Bank of England, the Swiss National Bank and the Bank of Japan to no upper limit. (3) On October 8, 2008, the Federal Reserve, the European Central Bank, the Bank of England, the Bank of Canada, the Swedish Central Bank and the Swiss National Bank jointly announced a 50 basis point interest rate cut. Unconventional measures taken by the US Treasury to deal with the crisis In the first half of 2007, the US subprime mortgage crisis just happened, and the US Treasury took conventional policy measures to deal with it. Later, with the escalating financial crisis and the worsening economic and financial situation in the United States, the US Treasury was forced to introduce a series of unconventional measures to meet the challenges of the crisis. (1) 1 50 billion US dollars fiscal stimulus plan In 200814, the US Congress announced the implementation of150 billion US dollars fiscal stimulus plan. According to this plan, American families will receive different tax rebates, business investment will enjoy 50% depreciation in the first year, and small and medium-sized enterprises will also enjoy additional tax incentives. In addition, the securitization limits of Fannie Mae and Freddie Mac have been temporarily raised, and the guarantee amount of the Federal Housing Committee has also increased accordingly. (II) Assistance and takeover of Fannie Mae and Freddie Mac On July 13, 2008, the U.S. government announced that the U.S. Treasury and the Federal Reserve would jointly provide assistance to the troubled Fannie Mae and Freddie Mac: First, increase the loan amount that the two companies can obtain from the Ministry of Finance. Second, in order to ensure that Fannie Mae and Freddie Mac can obtain sufficient capital, the Ministry of Finance will have the right to buy shares in either of them when necessary. The third is to allow the two companies to borrow directly from the discount window of the Federal Reserve in new york. On July 22, 2008, when the world was still debating whether the US government should rescue Fannie Mae and Freddie Mac, the US House of Representatives approved a housing assistance bill with a total amount of 300 billion US dollars, giving the Ministry of Finance the power to provide assistance to Fannie Mae and Freddie Mac, and also providing assistance to mortgage families in trouble. According to this bill, the Federal Housing Commission can provide up to $300 billion in refinancing guarantee to about 400,000 mortgage families facing the risk of foreclosure, helping them to convert their current mortgage loans with higher interest rates into 30-year fixed-rate loans with lower interest rates. On September 7, 2008, due to the further deterioration of the situation of Fannie Mae and Freddie Mac, the US government announced the four-step plan of the two companies: first, the Federal Housing Finance Agency took the lead in taking over Fannie Mae and Freddie Mac; Second, the Ministry of Finance, Fannie Mae and Freddie Mac respectively signed the purchase plan of preferred shares; Third, establish a new secured loan instrument for Fannie Mae and Freddie Mac and the Federal Housing Loan Bank; The fourth is to launch a temporary plan to purchase mortgage-backed securities from government-funded enterprises. (III) Launching the largest financial rescue plan in history 20081October 3, US President Bush approved the Emergency Economic Stability Act of 2008 and launched the largest financial rescue plan in history of 700 billion US dollars. The main contents include: first, authorize the US Treasury Department to establish TARP, and purchase the damaged assets of financial institutions step by step with 700 billion US dollars within the two-year validity period; Second, after the disposal plan of damaged assets is established, the Ministry of Finance is allowed to provide insurance for the loss of assets of financial institutions; The third is to set up a financial stability supervision Committee and an independent Committee to supervise the implementation of the bill; The fourth is to limit the executive compensation of enterprises receiving government assistance; Fifth, cooperate with foreign financial supervision departments and central banks; Sixth, protect the interests of taxpayers in an important position; Seventh, increase assistance to mortgage applicants who have lost their foreclosure. (IV) Reform of the financial supervision system In a sense, the reform of the financial supervision system in the United States is the most significant and far-reaching unconventional response measure taken by the US government in this financial crisis. In the past financial crisis, the US government mainly adopted a variety of macroeconomic policy combinations including fiscal policy and monetary policy to deal with it. In the spring of 2007, US Treasury Secretary Henry Merritt Paulson called for a re-examination of the US financial supervision system in order to better handle the relationship between protecting investors and enhancing market competitiveness. In the autumn of 2007, Paulson announced that the US Treasury would design a reform plan for the financial supervision system. On March 3rd, 2008, the US Treasury Department published a 2 18-page blueprint for the reform of the US financial supervision system. The blueprint for the reform of the financial supervision system in the United States includes three goals: first, the short-term goal: to strengthen the mission of the President's working group on financial markets and include bank supervisors in the group; The Fed further promotes the expansion of loan channels; Initiate the establishment of a unified national mortgage loan standard; Set uniform minimum standards for States to issue licenses to mortgage market participants. Second, the medium-term goal: merge the Office of Supervision of Savings Institutions (OTS) and the Office of Monetary Supervision (OCC); The Federal Reserve is responsible for supervising the payment and settlement system; Establish a federal insurance supervision system, which is managed by the National Insurance Administration under the Ministry of Finance; Merge the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Third, the long-term goal: to establish three major financial regulatory agencies in the United States, namely the Federal Reserve, to play the role of "market stability regulator" and maintain the stability of the US financial market; Set up "financial integrity supervisor" to be responsible for the supervision of the banking industry; Establish a "business behavior supervisor" to standardize business activities and protect the interests of consumers.