HELLO!  I need a suitable response to my fellow student’s response to the discussion question below.  Please – a MUST HAVE is that there is a citation from one of the attached chapters.  I can’t just say it’s a good response (which it is) but offer some form of feedback.  Challenging for me, but please help.(ref Nieshia)From 2007-2010, the Federal Reserve Bank (the Fed) used many practices that had never before been seen from the central bank of the United States.Discuss the some of the actions that the Fed took during this period.  Such as:How the Federal Reserve’s lending practices changed during this period.  What did the Federal Reserve do to support firms deemed “too big to fail.” Do you believe these actions were necessary to avoid a collapse in the financial system?  Support your opinion with information from the textbook or external source(s).Reference: Chapter 12, section 12.4: Bank Failures During the Great Recession, Chapter 14, section 14.4: Monetary Policy in the 2000s, and Conclusions section at the end of the Chapter 14STUDENT RESPONSEThe Federal Reserve Bank (the Fed) has many functions, but one of the main ones is to provide bank safety. During the Great Recession of 2007-2009 the Fed had to intercede to prevent the complete collapse of the banking system. During this time the economy suffered from failed bank assets, because of the savings and loan crisis. Many changes to the system were needed to prevent this from happening again. Amacher and Pate write “These changes were made in an effort to provide stability to the U.S. banking system and encourage greater consumer confidence. First, all accounts that do not earn interest are insured in full, regardless of the balance. Those accounts that earn interest are still covered under the standard regulations for bank accounts” (2012, Sec 12.4).  Many people were losing confidence in the banks and in the banking system, I know of several people who pulled their money out claiming that if there was a complete collapse of the economy the Federal Government would come in and take away all of your funds. I don’t know if this would have happened or not, but some people believed that it could.  Another change in the banking system was due to the theory or belief that some companies or corporations are too big to fail. This theory or belief was proven to be wrong, and the evidence was seen with the downfall of large corporations like Fannie Mae and Freddie Mac. Another chance that was made in response to the Great Recession was the signing into law on July 21, 2010 of the Dodd-Frank Wall Street Reform and Consumer Protection Act by President Barack Obama; which permanently raises the current standard maximum deposit insurance amount (SMDIA) to $250,000 (Amacher and Pate, 2012). I believe that the actions taken were probably the right actions at the time to avoid further collapse. To what extent I don’t know for sure, but some policies and laws needed to change and change fast. One of Obama’s economic advisers said in her commencement speech, A key difference between the financial crisis of the 1930s and the recent crisis was the response of the Federal Reserve. In the early 1930s, the Federal Reserve stood idly by and allowed banking panics to go unchecked. The result was widespread bank failures and devastating declines in the money supply. In the fall of 2008, the Federal Reserve and other financial policymakers responded aggressively to the financial crisis, taking crucial measures to provide liquidity, reassure depositors, and maintain key lending flows. Over those terrifying months following the collapse of Lehman Brothers, the Federal Reserve made the difference between hanging at the edge of a cliff and falling to the bottom of the ravine (College of William and Mary Commencement Address, 2010). References  Amacher, R., & Pate, J. (2012). Principles of Macroeconomics. Available from https://content.ashford.edu/print/AUECO203.13.1?sections=front_matCouncil of Economic Advisers (Producer). (2010). New Policies for a New Century: Recent Economic Actions through the Lens of the New Deal [speech]. Retrieved from http://www.whitehouse.gov/administration/eop/cea/speeches-testimony/new_policies_for…Attachment 1Attachment 2

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