BackFederal Reserve Policies during the 2007-2009 Recession definitions
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1/14BackSkip to main contentBackMortgage-Backed Securities
Bundles of home loans sold as investments, mixing low and high-risk mortgages, whose value collapsed as defaults rose. Subprime Loans
High-risk mortgages given to borrowers with poor credit, often bundled with safer loans to mask their risk. Investment Banks
Financial institutions holding large positions in mortgage-backed securities, heavily impacted by the real estate crash. Discount Loans
Short-term, low-interest funds provided by the Fed to banks for liquidity, unusually extended to investment banks during the crisis. Treasury Securities
Highly reliable government debt instruments exchanged by the Fed for troubled assets to stabilize bank balance sheets. Liquidity
The ease with which banks can access cash or assets to meet short-term obligations, crucial during financial turmoil. Bear Stearns
A major investment bank whose collapse was prevented by a Fed-facilitated acquisition to avoid widespread panic. Fannie Mae
A government-sponsored enterprise taken over by the Fed to support the mortgage market and restore confidence. Freddie Mac
A public entity involved in mortgage purchasing, placed under federal control to stabilize housing finance. Lehman Brothers
A large investment bank allowed to fail, highlighting the risks of government bailouts and moral hazard. Moral Hazard
A situation where protection from losses encourages riskier behavior, as seen when bailouts are expected. Troubled Asset Relief Program
A government initiative providing funds to banks in exchange for ownership stakes, aiming to restore financial stability. Partial Ownership
Government acquisition of equity in banks as a condition for financial support during the crisis. Great Recession
A severe economic downturn from 2007 to 2009, mitigated by aggressive and unprecedented Federal Reserve actions.
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