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Reply #46


Response to Demeter (Reply #4)

Tue Jan 17, 2012, 08:34 AM

46. So housing/real estate poses a systemic risk

And who is supposed to be minding the store regarding systemic risk?

FROM WIKI

Preventing asset bubblesThe board of directors of each Federal Reserve Bank District also has regulatory and supervisory responsibilities. For example, a member bank (private bank) is not permitted to give out too many loans to people who cannot pay them back. This is because too many defaults on loans will lead to a bank run. If the board of directors has judged that a member bank is performing or behaving poorly, it will report this to the Board of Governors. This policy is described in United States Code:

Each Federal reserve bank shall keep itself informed of the general character and amount of the loans and investments of its member banks with a view to ascertaining whether undue use is being made of bank credit for the speculative carrying of or trading in securities, real estate, or commodities, or for any other purpose inconsistent with the maintenance of sound credit conditions; and, in determining whether to grant or refuse advances, rediscounts, or other credit accommodations, the Federal reserve bank shall give consideration to such information. The chairman of the Federal reserve bank shall report to the Board of Governors of the Federal Reserve System any such undue use of bank credit by any member bank, together with his recommendation. Whenever, in the judgment of the Board of Governors of the Federal Reserve System, any member bank is making such undue use of bank credit, the Board may, in its discretion, after reasonable notice and an opportunity for a hearing, suspend such bank from the use of the credit facilities of the Federal Reserve System and may terminate such suspension or may renew it from time to time.

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Tansy_Gold Jan 2012 OP
Demeter Jan 2012 #1
Roland99 Jan 2012 #47
Roland99 Jan 2012 #64
Demeter Jan 2012 #2
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dixiegrrrrl Jan 2012 #57
Demeter Jan 2012 #4
jtuck004 Jan 2012 #11
newfie11 Jan 2012 #17
Demeter Jan 2012 #18
jtuck004 Jan 2012 #68
Tansy_Gold Jan 2012 #75
LineLineReply So housing/real estate poses a systemic risk
Po_d Mainiac Jan 2012 #46
Demeter Jan 2012 #5
Demeter Jan 2012 #6
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