As featured in The Wall Street Journal, Money Magazine, and more!

Fed Busy Lowering Rates Over the Weekend

This article was written by in Economy. 2 comments.

While I was having dinner with my father last night, the Federal Reserve lowered the interest rate at which it loans money to central banks. While my family and I were discussing the economy (among a number of other more interesting topics), Ben Bernanke was actually doing something. Will the move help? It will be good for JP Morgan Chase, who will likely use the Fed’s funds borrowed at this rate to buy its collapsed rival, Bear Stearns.

Do these bail-outs send the right message? To me, in the interest of saving our faltering economy, the message to banks seems to be, “Feel free to lend to risky customers. If the worst happens, we’ll bail you out.” The message to consumers seems to be, “Buy more on credit than you can afford as long as everyone else is doing so.”

Sunday surprise: Fed steps into credit crisis [CNN Money]

Updated June 20, 2014 and originally published March 17, 2008. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

Email Email Print Print
About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 1 comment… read it below or add one }

avatar John

and the message to people in foreclosure or nearing foreclosure is “we can’t help you for taking out more then you can afford.” Some of the borrowers probably were working the system. But the majority just wanted a home and probably didn’t know what types of loans they were being given. The banks definitely knew what they were doing and taking extraordinary risks with people’s money.

Reply to this comment

Leave a Comment

Note: Use your name or a unique handle, not the name of a website or business. No deep links or business URLs are allowed. Spam, including promotional linking to a company website, will be deleted. By submitting your comment you are agreeing to these terms and conditions.

Notify me of followup comments via e-mail. You can also subscribe without commenting.