Bank bailouts during crisis worked

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New research from Olin may redeem and restore the word “bailout” that became a dirty word during the 2008 financial crisis, according to Dave Nicklaus, columnist at the St. Louis Post-Dispatch.

“Jennifer Dlugosz, assistant professor of finance at the Olin Business School, and two co-authors looked at a pair of Federal Reserve programs that were pumping $221 billion a day into banks at the height of the crisis.
What they found should be heartening for the Fed and its defenders: For each dollar in emergency support, large banks lent an additional 60 cents and small banks lent 30 cents.”    Link to St. Louis Post Dispatch.

Nicklaus also notes, “The names of banks that took emergency loans used to be secret, but two news organizations sued and forced the Fed to disclose the recipients. Dlugosz believes her study is the first to use the resulting data.”



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