in April p>27, the second largest subprime mortgage institution in the United States, New Century Financial Company, filed for bankruptcy protection as a symbol, and the subprime mortgage crisis in the United States officially kicked off. Since then, the crisis has intensified, a large number of institutions engaged in subprime mortgage business have gone bankrupt one after another, major financial institutions have suffered huge losses one after another, and the international financial market has been violently turbulent. The market predicts that the global losses related to subprime loans will reach 1.5 trillion US dollars. Since 28, 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 strength of which are rare in the history of the United States in the past 1 years. Unconventional measures taken by the Federal Reserve to deal with the crisis

The massive credit crunch triggered by the subprime mortgage crisis in the United States has severely hit market confidence. Although the Federal Reserve has continuously lowered the federal funds interest rate and rediscount rate by a large margin, and used conventional monetary policy almost to the extreme, it still can't stop the violent turmoil in the international financial market and the sustained slowdown of the American economy. To this end, the Fed has to choose various unconventional measures to increase the liquidity supply in the market, expand the scale of credit and restore market confidence.

(1) New liquidity management means

The first is to adjust the discount window loan policy. Since August 27, the Federal Reserve has repeatedly adjusted its discount policy to encourage commercial banks with financial difficulties to borrow from the Federal Reserve. On August 17th, 27, the Federal Reserve lowered its discount rate by 5 basis points, so that the difference between its interest rate and the US federal funds rate was reduced from the first 1 basis points to 5 basis points, and the loan period was extended to 3 days, which can be extended upon request. On March 18th, 28, the Federal Reserve lowered its discount rate by 75 basis points again, further reducing its discount rate and the federal funds rate to 25 basis points and extending the loan period to 9 days. < /P>

< P> The second is to launch a new financing mechanism. On December 12th, 27, the Federal Reserve launched the Innovative Financing Mechanism (TAF) for qualified deposit-taking financial institutions. In TAF, the Federal Reserve provides a 28-day mortgage loan 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 the past 4 years because it determines the quantity in advance and adopts market-oriented auction, which can effectively solve the liquidity problem in the interbank market without complicating the management of bank reserves and federal funds interest rates. On July 3, 28, 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, 28, the Federal Reserve also indicated that it plans to launch two forward TAFs with a total amount of 15 billion in November, 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 been expanded to 3 billion on October 6, 28.

thirdly, the new securities lending mechanism is activated. On March 11th, 28, the Federal Reserve launched another innovative liquidity support tool (TSLF). TSLF is an asset swap agreement, which is valid for six months, in which the Federal Reserve replaces the mortgaged assets of primary securities dealers with treasury bonds by auction, and returns them after the expiration. TSLF's counterparties are limited to primary securities dealers, mainly investment banks. The eligible mortgage assets that traders can provide include federal agency bonds and mortgage-backed security and mortgage-backed security (MBS) issued by federal agencies.

fourth, the credit facility for primary dealers (PDCF) is activated, and the discount window is 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, 28, 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 is introduced, that is, the money market liquidity tool (AMLF), which supports the commercial paper market by supporting the money market. On September 19th, 28, in response to the shock on Wall Street 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 from the money market (MMMF). At the same time, the Federal Reserve also plans to directly purchase discounted bills issued by federal agencies such as Fannie Mae, Freddie Mac and the Federal Housing Loan Bank from primary dealers to further support the smooth operation of the commercial paper market. < /P>

< P> Sixth, the Commercial Paper Financing Tool (CPFF) was launched to directly support the commercial paper market. On October 7th, 28, the Federal Reserve announced the creation of CPFF. The operating mechanism is to directly purchase three-month asset-backed commercial paper (ABCP) and unsecured commercial paper with high rating and priced in US dollars from eligible commercial paper issuers through special purpose vehicles (SPV), so as to provide daily liquidity support for commercial paper issuers such as banks, large enterprises and local governments in the United States.

the seventh is to 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 6, 28, the Federal Reserve announced that it would pay interest to the statutory deposit reserve and excess reserve of commercial banks. Among them, the interest paid to the statutory reserve is 1 basis points lower than the average target interest rate of the federal funds in the deposit period of the reserve, 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 in the deposit period of the reserve. < /P>

(2) Direct assistance to financial institutions <; /P>

rescue investment bank Bear Stearns. On March 14, 28, Bear Stearns, the fifth largest investment bank in the United States, experienced a liquidity crisis. In order to help Bear Stearns, the Federal Reserve urgently approved a special transaction between JP Morgan and Bear Stearns, that is, the New York Federal Reserve provided emergency funds to Bear Stearns through JP Morgan to alleviate its liquidity shortage. Bear Stearns mortgaged its least liquid assets of $3 billion, and the New York Federal Reserve provided it with equal financing for 28 days through JP Morgan. This is the first time that the Federal Reserve has opened the discount window to non-bank financial institutions since the Great Depression in the 193s.

rescue Fannie Mae and Freddie Mac. On July 13, 28, the Federal Reserve and the U.S. Treasury jointly announced that they would provide assistance to Fannie and Freddie in financial difficulties. Among them, the Federal Reserve will allow Fannie and Freddie to borrow directly from the discount window of the New York Federal Reserve, 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 plan that the US government took over Fannie and Freddie on September 7, the New York Federal Reserve became the financial agent for the US Treasury to provide credit loans to Fannie and Freddie. < /P>

rescue 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, 28, the Federal Reserve announced that it would provide AIG with a high-interest mortgage loan of $85 billion, on condition that the US government should acquire 79.9% equity of AIG and hold its veto power to distribute dividends to other shareholders. On October 8, 28, 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 action. On December 12, 27, March 11 and September 18, October 8 and October 13, 28, in order to cope with the impact of the worsening financial crisis, the Federal Reserve successively carried out large-scale international joint aid operations with the European Central Bank, the Bank of England and the Bank of Japan. 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 establishes temporary currency swap arrangements with the central banks of major countries, and adjusts the term and scale of the swap according to the development of the situation. From October 13th, 28, in order to cooperate with the rescue actions of other central banks, the Federal Reserve announced that it would temporarily increase the amount of US dollar swap 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, 28, the Federal Reserve, the European Central Bank, the Bank of England, the Central Bank of Canada, the Central Bank of Sweden and the Swiss National Bank jointly announced a 5 basis point interest rate cut.

unconventional measures taken by the us treasury to deal with the crisis

in the first half of p>27, when the us subprime mortgage crisis just happened, 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 deal with the challenges of the crisis. (1) A fiscal stimulus package of $15 billion

On January 4, 28, the US Congress announced the implementation of a fiscal stimulus package of $15 billion. According to this plan, American families will receive different degrees of tax refund, business investment can enjoy 5% depreciation in the first year, and small and medium-sized enterprises can also enjoy additional tax incentives. In addition, the securitization limits of Fannie Mae and Freddie Mac were temporarily raised, and the guarantee amount of the Federal Housing Committee also increased accordingly.

(II) Assisting and Taking Over Fannie and Freddie

On July 13, 28, the US government announced that the US Treasury and the Federal Reserve would jointly provide assistance to the troubled Fannie and Freddie: First, increase the amount of loans that the two companies can obtain from the Treasury. Second, in order to ensure that Fannie and Freddie can obtain sufficient capital, the Ministry of Finance will have the power to buy shares of any of them when necessary. The third is to allow the two companies to borrow directly from the discount window of the New York Federal Reserve. On July 22, 28, while the world was still debating whether the US government should rescue Fannie and Freddie, the US House of Representatives approved a housing assistance bill with a total amount of 3 billion US dollars, which granted the Ministry of Finance the power to provide assistance to Fannie and Freddie, and could also provide help to mortgage households in trouble. According to this bill, the Federal Housing Commission can provide about 4, mortgage households facing the risk of foreclosure with a refinancing guarantee of up to $3 billion to help them convert their current mortgage loans with higher interest rates into 3-year fixed-rate loans with lower interest rates. On September 7, 28, due to the further deterioration of the situation of Fannie and Freddie, 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 and Freddie; Second, the Ministry of Finance and Fannie and Freddie signed senior preferred stock purchase plans respectively; Third, establish a new and guaranteed lending tool for Fannie and Freddie 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

On October 3, 28, US President Bush approved the Emergency Economic Stability Act of 28, launching the largest financial rescue plan of 7 billion US dollars in history. The main contents include: First, authorize the US Treasury Department to establish the TARP, and use 7 billion US dollars to purchase the damaged assets of financial institutions step by step within the two-year validity period; Second, after the establishment of the damaged assets disposal plan, the Ministry of Finance is allowed to provide insurance for the lost 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 are in foreclosure.

(IV) Reform of financial supervision system

In a sense, the reform of financial supervision system in the United States is the most significant and far-reaching unconventional response measure taken by the United States 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 p>27, U.S. treasury secretary Henry Merritt Paulson called for a re-examination of the U.S. financial supervision system in order to better handle the relationship between protecting investors and enhancing market competitiveness. In the autumn of 27, Paulson announced that the US Treasury would design a reform plan for the financial supervision system. On March 31, 28, the US Treasury Department published a 218-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 standard for mortgage loans; Set a uniform minimum standard 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 Supervision of Currency (OCC); The Federal Reserve is responsible for supervising the payment and settlement system; Establish a federal insurance supervision system, and the National Insurance Administration under the Ministry of Finance is responsible for managing the federal insurance supervision system; Merge the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). Third, the long-term goal: to establish three major financial regulators in the United States, that is, the Federal Reserve to play the role of "market stability regulator" to maintain the stability of the US financial market; Establish a "financial integrity supervisor" to be responsible for the supervision of the banking industry; Establish a "business conduct supervisor" to regulate business activities and protect consumers' interests.

a new batch of construction projects will be started ahead of schedule, such as railways and bridges.

Proactive fiscal policy, the state has allocated 4 trillion yuan to expand domestic demand, and local governments have allocated 15 trillion yuan to rescue the market.

Interest rates have dropped sharply to stimulate investment.

On December 2nd, it was reported that the RMB dropped 156 basis points. Although it was not responsible for the world, it was quite responsible for itself.

This was the trend of the financial crisis in 197, and I hope it will be useful to you (it is the fourth stage at present)

1. A bank or financial institution goes bankrupt

2. Depositors withdraw a large number of deposits

3. The low morale of the stock market has affected banks and depositors

4. Save a lot of cash, not only by individuals, but also by banks. The financial situation improved

6. Trade has been greatly affected, countless employees have been laid off, and people realize that the country must make a difficult industrial reset.