How The Government Mortgage Bailout Affected You
Second, the bailout allowed banks to start lending to each other again as banks had cut back on lending in April 2008. That made Libor rates unnaturally higher than the fed funds rate. Banks that couldn’t lend to each other were in danger of going bankrupt. That’s what happened to Lehman Brothers. It would have happened to AIG, Bear Stearns, and the big three automakers without federal intervention. By restoring the credit markets to more normal functioning, the bailout bill gave banks the freedom to start making loans again....