Financial Crises in the United States - Essay Example

These events have also led to major banks of the US creating an emergency package to rescue any ailing financial institution which is in need of assistance. The Federal government has also moved in to ensure that it has a bailout package to rescue financial institutions. The New York Times article expresses concern about the greater repercussions of these events. It worries that it would increase the unemployment rate (Sorkin, 2008). It also is concerned about the thousands of employees working at Merrill and Lehman Brothers.

The precarious condition of these companies was because of their inadequate investments in real estate during an economic boom. These investments were not secure which weakened the financial conditions of both companies. Most banks did not want to purchase Lehman Brothers because of the essential risks associated with it. The article also expresses concern about the financial health of AIG (Sorkin, 2008). It can be concluded that these events have sent shockwaves throughout the American financial system.

In this article, it is learned that the Federal Reserve has not reduced interest rates which has been demanded by Wall Street and financial institutions. But despite this, the Federal Reserve states in the article that it would closely monitor and observe the crisis. It has been investigating and analyzing the financial crisis which has slowed down economic growth in the United States of America (Reddy, 2008). Other major actions have included lending government support for troubled financial institutions.

The main focus of the article is about whether further reducing the interest rates will have any impact on the economy or not. One school of thought believes that lowering the interest rates further would be risky and devastating for the US economy. Others blame the Federal Reserve for keeping low interest rates since 2001 (Reddy, 2008). They blame this for