Guarantees and Capital Infusions in Response to Financial Crises B: U.S. Guarantees During the Global Financial Crisis

Abstract

During 2008-09, the federal government extended multiple guarantee programs in an effort to restore the financial market and contain the panic and crisis in the market. For example, the Treasury provided a temporary guarantee program for the money market funds, the FDIC decided to stand behind certain debts and non-interest bearing transaction accounts, and the Treasury, the FDIC and the Federal Reserve agreed to share losses in certain assets belonging to Citigroup. This case reviews these guarantee programs implemented during the global financial crisis by the government and explores the different rationale that shaped certain design features of each program.

Keywords: Guarantee, Money market fund, Temporary Liquidity Guarantee Program, Debt Guarantee Program, Transaction Account Guarantee Program, Asset Guarantee Program, FDIC, Citigroup

JEL Classification: G01, G18, G28