Lehman Brothers, the giant investment firm, declared bankruptcy in September 2008. The next day, the Federal Reserve’s policy-setting committee convened for a regularly scheduled meeting as markets wondered just how far Lehman’s collapse would ripple through the financial system.
Ben Bernanke, then Fed chairman, said he was “grappling” with the necessity of making ad hoc decisions about “moral hazard,” according to transcripts from the 2008 meetings, released Friday after a five-year lag.
“In each event, in each instance, even though there is this sort of unavoidable ad hoc character to it, we are trying to make a judgment about the costs — from a fiscal perspective, from a moral-hazard perspective, and so on — of taking action versus the real possibility in some cases that you might have very severe consequences for the financial system and, therefore, for the economy of not taking action,” Bernanke said at the Federal Open Market Committee’s Sept. 16 meeting.
“I am decidedly confused and very muddled about this,” he said.
Although we know now that the economy was going to continue its downward spiral, most FOMC members — including then-San Francisco Fed President and now-Fed Chair Janet Yellen — thought it was too soon to provide monetary accommodation in the form of further interest-rate cuts at that September meeting.
“My policy preference is to maintain the federal-funds rate target at the current level and to wait for some time to assess the impact of the Lehman bankruptcy filing, if any, on the national economy,” said St. Louis Fed President James Bullard. “I think we should be seen as making well-calculated moves with the funds rate, and the current uncertainty is so large that I don’t feel as though we have enough information to make such calculations today,” said Charles Evans, the Chicago Fed president.
Like Bullard and Evans, Eric Rosengren, president of the Boston Fed, wasn’t a voting member at that September meeting. But he had a different take. “This is already a historic week, and the week has just begun”¦. The degree of financial distress has risen markedly,” Rosengren said. “Given that many borrowers will face higher interest rates as a result of financial problems, we can help offset this additional drag by reducing the federal-funds rate.”
The FOMC’s voting members unanimously stood pat at that September meeting’s conclusion, leaving the federal-funds rate at 2 percent. As the economy continued to unravel over the coming months, the Fed opted to act, cutting the rate to near zero when it met in December and ushering in a new era of monetary policy as the Fed turned to unconventional tools — like the three bond-buying programs it has since launched — to boost the economy.
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The national polls, once again, tell very different stories: Clinton leads by just one point in the IBD, Rasmussen, and LA Times tracking polls, while she shows a commanding 12 point lead in the ABC news poll and a smaller but sizable five point lead in the CNN poll. The Republican Remington Research Group released a slew of polls showing Trump up in Ohio, Nevada, and North Carolina, a tie in Florida, and Clinton leads in Pennsylvania, Wisconsin, and Virginia. However, an independent Siena poll shows Clinton up 7 in North Carolina, while a Monmouth poll shows Trump up one in Arizona
Since the release of the Access Hollywood tape, on which Donald Trump boasted of sexually assaulting women, "Senate Republicans have seen their fortunes dip, particularly in states like Florida, North Carolina, New Hampshire, Nevada and Pennsylvania," where Hillary Clinton now leads. Jennifer Duffy writes that she now expects Democrats to gain five to seven seats—enough to regain control of the chamber.
"Of the Senate seats in the Toss Up column, Trump only leads in Indiana and Missouri where both Republicans are running a few points behind him. ... History shows that races in the Toss Up column never split down the middle; one party tends to win the lion’s share of them."
"Some Republicans are running so far away from their party’s nominee that they are threatening to sue TV stations for running ads that suggest they support Donald Trump. Just two weeks before Election Day, five Republicans―Reps. Bob Dold (R-Ill.), Mike Coffman (R-Colo.), David Jolly (R-Fla.), John Katko (R-N.Y.) and Brian Fitzpatrick, a Pennsylvania Republican running for an open seat that’s currently occupied by his brother―contend that certain commercials paid for by the Democratic Congressional Campaign Committee provide false or misleading information by connecting them to the GOP nominee. Trump is so terrible, these Republicans are essentially arguing, that tying them to him amounts to defamation."
Former Illinois GOP Congressman Aaron Schock "recently agreed to pay a $10,000 fine for making an excessive solicitation for a super PAC that was active in his home state of Illinois four years ago." Schock resigned from Congress after a story about his Downton Abbey-themed congressional office raised questions about how he was using taxpayer dollars.