Fed Action Indicates Economic Stability

Federal Reserves during its August 11-12 Open Market Committee meeting decided to wrap up its program to buy back $300 b worth of Treasury Securities by the end of October. The action foretells Fed's increasing confidence in the belief that economy might have bottomed out. However, Fed is not halting an ongoing program to buy back $1.25 trillion worth of mortgage-backed securities.

Savings and Loans Bailout

Congress created Resolution Trust Corp in 1989 to dispose off the bad assets from the books of financial institutions during the peak of S&L crisis. The agency closed or bailed out 747 institutions holding assets of nearly $400b. It did so by seizing the assets of troubled savings and loans, and then reselling them to investors at a bargain price. By 1995, S&L crisis has abated and Resolution Trust Corp has been folded into FDIC.