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Are the Bailouts of Wall Street Complements or Substitutes?

Author

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  • Linus Wilson

    ()

  • Yan Wu

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  • Stephanie Prejean

    ()

Abstract

The Term Securities Lending Facility (TSLF) lent $2.3 trillion worth of general collateral to 18 investment houses in exchange for riskier securities. Treasury collateral was in high demand in 2008 and 2009 as repo markets shunned lower quality collateral. This paper finds a negative and significant relationship between participating in the TSLF and having funds from the Troubled Asset Relief Program (TARP) and other Federal Reserve lending programs. Thus, it appears that the TSLF was a substitute for other bailouts. In addition, dealers with higher paid CEOs were more likely to borrow in the next TSLF auction cycle. Copyright International Atlantic Economic Society 2014

Suggested Citation

  • Linus Wilson & Yan Wu & Stephanie Prejean, 2014. "Are the Bailouts of Wall Street Complements or Substitutes?," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 42(1), pages 21-38, March.
  • Handle: RePEc:kap:atlecj:v:42:y:2014:i:1:p:21-38
    DOI: 10.1007/s11293-013-9395-x
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    References listed on IDEAS

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    1. Warren B. Hrunga & Jason S. Seligman, 2015. "Responses to the Financial Crisis, Treasury Debt, and the Impact on Short-Term Money Markets," International Journal of Central Banking, International Journal of Central Banking, vol. 11(1), pages 151-190, January.
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    1. repec:eee:ecofin:v:45:y:2018:i:c:p:101-115 is not listed on IDEAS

    More about this item

    Keywords

    Bailout; Banks; Capital Purchase Program (CPP); CEO pay; Discount window; Dodd–Frank Wall Street Reform Act of 2010; Emergency lending; G01; G18; G2; G24; G28;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G2 - Financial Economics - - Financial Institutions and Services
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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