Chicago Federal Reserve

Topic: Chicago Federal Reserve #1

When the Chicago Federal Reserve was founded they had one mission. That mission was to meet the credit needs of their local community and clients, whether they are low income workers or high income workers. In other world they are a bank. They also try to aid in how people should invest their money and keeping the financial market stable. They do this by collecting much economic data and analyzing that data and making their findings fairly public, but how do they actually help the economy.

After September 11th there were many firms who almost came to a standstill in the market. They needed money, but the large amounts of money they needed and how fast they needed it was unreasonable for the banking community. This is when the Feds stepped in and "because the Federal Reserve was able to reassure banks that any demand for increased liquidity would be met" (Moskow) many firms who needed fast money, got it. The effect on these firms if they hadn't gotten this money would have been horrifying, in fact many firms would have gone bankrupt and gone out of business. Thus by stepping in the Feds may have prevented a huge economic downfall.

Another event that happened after 9/11 is that there were "numerous problems executing trades" (Moskow). That is, after 9/11 banks were unable to liquidate funds quickly, but the Feds were, thus when they issued a statement saying that they were open and ready for any liquidity needs demand soared. There were "record's of nearly $46 billion [in liquidity] on the day after the attacks" (Moskow)." The Fed also was active on the international scene. [They] established... [a] 30-day swap arrangements with the European Central Bank, the Bank of Canada and the Bank of England. This enabled these central banks to provide dollar-denominated liquidity to assist, if needed, banks in their countries in settling dollar-denominated transactions." (Moskow). The problems with liquidation were quickly solved by the Feds and as a result prevented unemployment from arising.

All in all the Feds are there as a kind of backbone for us and a regulator in case of any problems. After 9/11 they were able to avert many disasters, but were not completely successful. For instance the airlines suffered the worst and the Feds were not able to help them. But imagine, what would we do in an unregulated