How does the Fed seek to preserve public confidence when bank lending has been either fraudulent or misguided and the bank is in danger of failing?

Question

Quizplus · Accepted Answer

The Fed seeks to preserve public confidence by taking multiple actions when a bank is in danger of failing. Finding a merger partner for the weak institution can prevent the bank from failing completely and provides a stronger financial backing for the bank. Lending funds to the weak institution gives it time to work out its problems and recover. Removing the management of the weak institution helps to ensure that the same mistakes are not made in the future by new management. Therefore, all of the above choices are correct.

How Does the Fed Seek to Preserve Public Confidence When