Fed Adopts Emergency Loan Limits Banning AIG-Style Bailouts
- Rule calls for future rescues to involve at least five firms
- Dodd-Frank dictated changes amid furor over AIG, Bear Stearns
James Tisch: Fed Should Have Raised Rates Years Ago
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The Federal Reserve took the final step to ensure it can’t repeat the extraordinary measures taken to rescue American International Group Inc. and Bear Stearns Cos. in 2008, adopting formal restrictions on its ability to help failing financial firms.
Under the revised authority approved in a 5-0 vote Monday, the Fed would only be able to save firms in a broad-based scenario including at least five entities at the same time. The changes are designed to reflect Congress’ intention in the 2010 Dodd-Frank Act to prevent the central bank from bailing out individual companies.