When Genius Failed - Study Guide At the Fed Summary & Analysis

Roger Lowenstein
This Study Guide consists of approximately 29 pages of chapter summaries, quotes, character analysis, themes, and more - everything you need to sharpen your knowledge of When Genius Failed.
This section contains 852 words
(approx. 3 pages at 400 words per page)
Buy the When Genius Failed Study Guide

In 1913 the Federal Reserve System was created as a private institution that was managed in the public interest. It was supposed to promote stability in the banking and monetary system. One of its functions is the adjustment of short-term interest rates. A group from the Fed traveled to the Greenwich headquarters of Long-Term. During the meeting, Hilibrand showed them the risk aggregator that summarized the fund's exposure in each market. The Fed representatives were shocked by the numbers that they saw indicating the extent of Long-Term's exposure.

The way the trades were orchestrated, the counterparties were supposed to be protected by their collateral. A failure of the fund meant that the counterparties would have to sell, which would further depress the market. The Fed team concluded that if Long-Term fell, many investment banking companies and banks would go with it. Bankruptcy...

(read more from the At the Fed Summary)

This section contains 852 words
(approx. 3 pages at 400 words per page)
Buy the When Genius Failed Study Guide
Copyrights
BookRags
When Genius Failed from BookRags. (c)2014 BookRags, Inc. All rights reserved.