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How large has the federal financial safety net become?

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  • Nadezhda Malysheva
  • John R. Walter

Abstract

Legislative and regulatory actions taken in response to the financial turmoil which occurred between 2007 and 2009 expanded the extent to which financial institution liabilities were protected by federal government guarantees: i.e., these actions expanded the federal financial safety net. How large has the safety net become? Walter and Weinberg (2002) measured and examined the size of the safety net as it stood in 1999. We estimate the size of the safety net as of the end of 2008, after the creation of a number of government programs meant to back financial liabilities. We use methods similar to those employed by Walter and Weinberg and find that the safety net has expanded significantly. We briefly describe our results and provide a table detailing them. ; This paper builds on a Winter 2002 Cato Journal article.

Suggested Citation

  • Nadezhda Malysheva & John R. Walter, 2010. "How large has the federal financial safety net become?," Working Paper 10-03, Federal Reserve Bank of Richmond.
    • Handle: RePEc:fip:fedrwp:10-03
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    References listed on IDEAS

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    1. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 24(Win), pages 14-23.
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    Cited by:

    1. Renee Courtois Haltom & John A. Weinberg, 2015. "Unsustainable Fiscal Policy: Implications for Monetary Policy," Economic Quarterly, Federal Reserve Bank of Richmond, issue 2Q, pages 151-167.
    2. Matthew Richardson, 2012. "Regulating Wall Street: the Dodd–Frank Act," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 36(Q III), pages 85-97.
    3. John R. Walter, 2003. "Banking and commerce : tear down this wall?," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 89(Spr), pages 7-31.
    4. Kartik B. Athreya & Xuan S. Tam & Eric Young, 2009. "Are harsh penalties for default really better?," Working Paper 09-11, Federal Reserve Bank of Richmond.
    5. Kartik B. Athreya & Xuan S. Tam & Eric Young, 2014. "Loan Guarantees for Consumer Credit Markets," Economic Quarterly, Federal Reserve Bank of Richmond, issue 4Q, pages 297-352.
    6. repec:fip:a00001:94154 is not listed on IDEAS
    7. Viral V. Acharya & Matthew Richardson, 2012. "Implications of the Dodd-Frank Act," Annual Review of Financial Economics, Annual Reviews, vol. 4(1), pages 1-38, October.
    8. Selgin, George & Lastrapes, William D. & White, Lawrence H., 2012. "Has the Fed been a failure?," Journal of Macroeconomics, Elsevier, vol. 34(3), pages 569-596.
    9. Aaron Steelman & John A. Weinberg, 2008. "The financial crisis : toward an explanation and policy response. 2008 annual report of the Federal Reserve Bank of Richmond," Annual Report, Federal Reserve Bank of Richmond, pages 4-19.
    10. Robert L. Hetzel, 2009. "Should increased regulation of bank risk-taking come from regulators or from the market?," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 95(Spr), pages 161-200.

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    Keywords

    Deposit insurance;

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