Government Intervention

By: Lily Chung

Over the past couple months, the United States government has continued to pour money into banks and the market in order to keep businesses and banks afloat. The list of government intervention includes providing Bear Stearns with $30 billion, government takeover of Fannie Mae and Freddie Mac, $40 billion injection for Citigroup, and the list can go on. Even with all these interventions, the financial crisis continues to spread globally with no end in sight.

The spread of the financial crisis across the globe can be seen when observing the exchange rates and having observed them over the past couple months, constant fluctuations have been noticed during this time of financial crisis. The International Monetary Fund was created to stabilize currencies, but lately it has been too busy fighting the financial crisis instead of concentrating on reducing exchange rate fluctuations.

The fight against the financial crisis continues with Barack Obama taking the lead now. "The Obama administration plans to move quickly to tighten the nation's financial regulatory system." After the most recent discovery of a Ponsi Scheme created by Bernard L. Madoff, the administration plans to engage stricter federal rules for hedge funds, credit rating agencies and mortgage brokers. A new guiding principle that has embraced by the administration was that "major companies and financial instruments must be swept back under a larger regulatory umbrella." The administration has been evaluating the crisis, taking notice of the holes and lack of regulation in the system that has brought the United States financial system into a crisis.

Sources:
Rx for Our Financial Crisis
The Global Financial Crisis
Obama Plans Fast Action to Tighten Financial Rules