When the Federal Reserve made rescue loans secured by collateral, but without recourse, these loans were _ , because the Federal Reserve _ if the borrower defaulted.

Question

Quizplus · Accepted Answer

When the Federal Reserve makes loans secured by collateral without recourse, it means that if the borrower defaults, the Fed can only claim the collateral and cannot pursue the borrower for any shortfall. If the collateral is worth less than the loan amount, the Fed bears the risk of loss, making the loans risky.

When the Federal Reserve Made Rescue Loans Secured by Collateral