The Fed allowed nonbank financial institutions to borrow money from the discount window during the mortgage crisis and even allowed nonbanks to swap mortgages for Treasury securities. This was an attempt by the Fed to reduce ________ at institutions.

Question

Quizplus · Accepted Answer

The borrowing from the discount window and the swap of mortgages for Treasury securities were aimed at reducing liquidity risk at financial institutions during the mortgage crisis. The other options are not directly related to the measures taken by the Fed in this context.

The Fed Allowed Nonbank Financial Institutions to Borrow Money from the Discount