On Friday, August 17, the Federal Reserve lowered its discount rate from 6.25% to 5.75%. This not to be confused with the Fed Funds Rate, although many Fed-watchers think this means the FOMC will lower that rate at its next meeting on September 18.
Contents contributed and discussions participated by Stephen Lu
Fed Lowers Discount Rate - What Does It Mean? - 0 views
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The Fed lowered the rate to restore confidence in the financial markets, battered by the ongoing 2007 banking liquidity crisis. The discount rate is the what the Fed charges banks at its discount window. By lowering the rate, the Fed makes it easier for banks to borrow funds needed to maintain their reserve requirement. Normally, banks would borrow from each other, rather than go to the Fed's discount window.
Robert J. Samuelson - Alan Greenspan's flawed analysis of the financial crisis - washin... - 0 views
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Greenspan favors tougher capital requirements for banks. These would provide a larger cushion to absorb losses and would bolster market confidence against serial financial failures. Before the crisis, banks' shareholder equity was about 10 percent: $1 in shareholders' money for every $10 of bank loans and investments. Greenspan would go as high as 14 percent.
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First, the end of the Cold War inspired an economic euphoria that ultimately caused the housing boom. Capitalism had triumphed. China and other developing countries became major trading nations. From the fall of the Berlin Wall to 2005, the number of workers engaged in global trade rose by 500 million. Competition suppressed inflation. Interest rates around the world declined; as this occurred, housing prices rose in many countries (not just the United States) because borrowers could afford to pay more.
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Definitions - 98 views
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In case anyone is searching up the banks, Federal Funds Rate may come out a lot.
The interest rate that banks charge each other for the use of Federal funds. It changes daily and is a sensitive indicator of general interest rate trends. The Federal funds rate is one of the of two interest rates controlled by the Fed. While the Fed can't directly affect this rate, it effectively controls it in the way it buys and sells Treasuries to banks. This is the rate that reaches individual investors, though the changes usually aren't felt for a period of time.
Source:http://www.investorwords.com/1902/Federal_funds_rate.html
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I think the politicians are the root of the problem, as they have bred this idea that everyone deserves a house. This is where the problem has started, and the financial crisis is the ultimatum of this so called "dream".