steps of the federal reserve and the government blog 3

The Federal Reserve, which is the U.S. central banking system and other central banks all over the world took some steps to keep the extent of the crisis as small as possible.
The first step of the Federal Reserve was to keep the market as liquide as possible so they printed more money which led to an inflation which means that there is much more money in the market nur the value of it decreases and the second step was to follow the ambition of the marcoeconomic objectives through monetary policy.
And the during the summer of 2007 different such as the fderal funds rate and the discount rate had been lowered and the federal open market committee feared that the interest are going to go down as well. The Federals Reserve accomplished open market operations which means that Fed controls the national money supply in order to ensure a liquidity in the market.
Furthermore the other banks finally lowered the interest rates on loans which they charged for member banks. To keep a liquidity in the market the Fed also offered short-term loans by using the Term auction facility. This is an auction where the Federal Reserve sell funds to institutions and the Fed announced repurchase agreements.
Furthermore the Fed started to lend money to more institutions and accepted more people to give them a loan. The Federal Reserve took many steps to prevent the worse case senario, a recession the last thing they did was to provide funds and empowered J.P. Mogan to buy Bear Stearns.
The government announced a plan which can be followed voluntarily to freez the mortgages because many homeowners had been afraid that the mortgage rate goes up. So the government collaborates with the private industry to help the people and the plan is called the Hope Now Alliance.
Regulators and legislators also had taken some actions to support the people who are affected by the crisis. For example tax policies, affordable housing, bankruotcy protection, education and the licensing and qualifications of lenders.
Furthermore the government encouraged financial institutions to make less risky decisions. That means the these institutions should not borrow money to buy bonds or to do other investments.
And there are credit rating agencies which informes people about the risks by making other investments. For examples the risks that are involved by mortgage-backed securities.