Skip to content
Subscriber Only

Fed’s Lacker Says Crisis in 2007 Worsened by Rescue Policy

Federal Reserve Bank of Richmond President Jeffrey Lacker said the financial system was weakened further as it began to fall into crisis in 2007 and 2008 by an “ambiguous rescue policy.”

The Richmond Fed president has been one of the biggest critics of an expanded safety net which he says reduces market discipline and creates more risk by raising expectations of bailouts. The Fed used multiple tools to aid financial institutions during the crisis, including opening a funding facility for corporate commercial paper and offering direct support for the Bear Stearns Cos. and American International Group Inc.