Building a Fortress Balance Sheet - Chase

Our economy is a machine that is ran by humans. A machine can only be as good as the person who makes it. This makes our economy susceptible to human error. A couple years ago the United States faced one of the greatest financial crisis since the Great Depression, which was the Great Recession. The Great Recession was a severe economic downturn that occurred in 2008 following the burst of the housing market. The government tried passing bills to see if anything would help it from becoming another Great Depression. Trying to aid the government was the Federal Reserve. The Federal Reserve went through a couple strategies in order to help the economy recover. The Federal Reserve provided three major strategies to start moving the economy in a better direction. The first strategy was primarily focused on the central bank’s role of the lender of last resort. The second strategy was meant to provide provision of liquidity directly to borrowers and investors in key credit markets. The last strategy was for the Federal Reserve to expand its open market operations to support the credit markets still working, as well as trying to push long term interest rates down. Since time has passed on since the Great Recession it has been a long road. In this essay we will take a time to reflect on these strategies to see how they helped.

Our nation faces many problems, and has for many years. Today’s generations, and especially the mainstream media, seem most concerned with social issues such as abortion and same sex marriage. While these issues are important, our economic situation should receive more urgent attention. Americans are desperate for better days, but lack a meaningful understanding of how our financial system works. Almost 100 years ago, the creation of the Federal Reserve Banking System was instated. One could argue that this system is the base of why we are 18 trillion dollars in debt, and rising. The Federal Reserve Banking System has contributed

Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets.

The Federal Reserve System is the most powerful institution in the United States economy. Functioning as the central bank of the United States, acting as a regulator, the lender of last resort, and setting the nation’s monetary policy via the Federal Open Market Committee, there is no segment of the American economy unaffected by the Federal Reserve [endnoteRef:1]. This power becomes even more substantial in times of “unusual and exigent circumstances,” as Section 13(3) of the Federal Reserve Act gives authority to the Board of Governors to act unilaterally in lending and market making operations during financial crisis[endnoteRef:2]. As illustrated by their decision making in the aftermath of the 2007-2008 Great Recession,

The balance sheet (BS) is significant to a business due to its ability to provide a “snapshot” of a company’s assets and liabilities at any given time. This financial document is a cursory representation of a business’s health. The use of comparative BS whether it be yearly, quarterly, or monthly provides the interested parties a tool to observe trends that are positive, negative, or neutral to a company’s financial health (Finkler, Jones, and Koyner,2013) .

In order to better the financial crisis, financial experts must first understand where the problem originated. In Too Big to Save, Robert Pozen develops principles for evaluating the government bailout efforts on a financial crisis. Pozen explains why the taxpayers will take most of the fall if the banks fail and we go into a recession. He confirms that financial officials will use prefer stocks compared to common stocks because they wanted to not nationalize the banks and to keep capitalism. Pozen presents an idea on how the United States financial regulation should be structured in the future. Since there are different proposals and perspectives, everyone will not agree on every proposal but this shows how we can evaluate our economy and how it should

“The Central Bank also raised concerns about the Feds lower interest rate encouraging rising demand for junk bonds and risky real estate investments and shifts in bank balance sheets as areas of concern. Mr. Bernanke said the Fed took these concerns very seriously and noted the central bank had significantly widen its efforts to monitor financial markets as well as greater priority to financial

The collapse of Lehman Brothers, a sprawling global bank, in September 2008 almost brought down the world’s financial system. Considered by many economists to have been the worst financial crisis since the Great depression of the 1930s. Economist Peter Morici coined the term the “The Great Recession” to describe the period. While the causes are still being debated, many ramifications are clear and include the failure of major corporations, large declines in asset values (some estimates put the drop in the trillions of dollars range), substantial government intervention across the globe, and a significant decline in economic activity. Both regulatory and market based solutions have been proposed or executed to attempt to combat the causes and effects of the crisis.

Had the Fed kept to one school of thought instead of vacillating between predictions of doom and gloom and then back again to all is well our nation might have bounced back more quickly from the burst bubble and the recession (Lowrey, 2014). It is this vacillation and “wait and see” attitude that clouds many economists’ thinking. Most of the time making small adjustments to the market and waiting it out is okay, but when things start to fall apart some vision is needed to spur the Fed into action and prevent another crisis. According to Mark Thoma at The Fiscal Times:

We all know from our course that leverage and liquidity risks of financial institutions are vulnerable to the crisis. The financial crisis that emerged in 2007 had many and varied causes, but one of its most

The professional’s feet were facing forward. The position let her body being balanced. It would let her bump the ball perfectly in the air. If her feet were facing at a different direction like before, she might’ve lost her balance since she was standing now.

The course project involved developing a great depth of knowledge in analyzing capital structure, theories behind it, and its risks and issues. Before I began this assignment, I knew nothing but a few things about capital structure from previous unit weeks; however, it was not until this course’s final project that came along with opening

The onset of summer tends to bring a lull in excitement in financial markets. The media is consequently forced to exaggerate the importance of economic releases over this seemingly mundane period. This year has proven to be no exception. The Financial Times recently reported that US consumer credit growth had surged by $18bn in the three months to June, thereby provoking fears that banks were being reckless and consumers were taking too much debt in a slow economy. These fears constitute a major departure from the worries that prevailed during the financial crisis, when many commentators were forecasting years of household deleveraging. Balance sheet adjustment in the sector would, therefore, act as

The figure of Ben Bernanke, the Chairman of the FED from 2006 to 2014, played a key role in determining the success and the accuracy of FED’s policies during this financial crisis and during its recovery. Aim of this work will be not only to delineate and analyze what are the major actions undertaken by the FED during this financial crisis, but also to investigate their effects, and the consensus on their positive effects for the recovery of the US economy.

Since The Altman’s model widely used among the investors, though it is not an intuitive model, once a firm is predicted having a financial distress next year, it has been treated as it has been financial distress currently (whtaker, 1999).