New Fed rule limits emergency lending power
Restrictions, which stem from Dodd-Frank Act of 2010, aim to ensure US central bank's aid in a crisis is not used to shore up insolvent firms
Washington
IN the lead-up to the financial crisis of 2008, the US Federal Reserve had the ability to make huge emergency loans to almost any entity it chose, a power it used to help save Wall Street firms from possible collapse.
Now, seven years later, the Fed, under the direction of Congress, has adopted a new rule that would place restrictions on its extraordinary financial powers. The restrictions, which stem from the Dodd-Frank Act of 2010, aim to make sure that the Fed's emergency loans are not used to shore up insolvent firms.
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