Brad De Long delong at econ.Berkeley.EDU
Tue Nov 9 07:27:00 PST 1999

>bill fancher wrote:
> >But Greenspan, along with New York Fed President William McDonough,
> >stressed that LTCM's rescue was not a government bailout because public
> >funds were not involved in the effort.
> > "The Federal Reserve Bank of New York's efforts were designed solely to
> >enhance the probability of an orderly private-sector adjustment,"
> >Greenspan said. "No Federal Reserve funds were put at risk, no promises
> >were made by the Federal Reserve and no individual firms were pressured
> >to participate."
>Right. And it wouldn't have happened had the NY Fed, acting as the
>executive committee of the bourgeoisie, not been knocking heads.

There is a question: did the NY Fed implicitly give promises of future regulatory *forbearance* if the investment banks cooperated, or did it implicitly threaten to drop the regulatory hammer on banks that did not cooperate?

I don't know. The people who do know don't tell. Probably it was as vague as "we hope that you all will be helpful..."

Brad DeLong

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