By Gregg D. Killoren, J.D., CCH State Banking Law Reporter, Bank Digest and Individual Retirement Plans Guide.
In remarks before the Consumer Bankers Association Annual Conference on June 8, 2010, Fed Governor Elizabeth A. Duke discussed the implications for retail banking of new regulations and altered consumer behavior in the aftermath of the financial crisis. Duke, speaking at the conference in Hollywood, Fla., noted that, at the outset of the financial crisis, “the Fed used a wide range of tools to fight the crisis in a direct and urgent manner, including lowering interest rates; maintaining a steady flow of dollars to meet demand abroad; providing liquidity to sound institutions to support faltering financial markets; and providing emergency loans to specific, troubled institutions whose failures would have had disastrous consequences for the financial system and the broad economy.” Defending against criticism of these actions, especially the decision to provide a loan to American International Group after allowing Lehman Bros. to go into bankruptcy, Duke offered, “I still believe that the consequences would have been far worse for all businesses and consumers if we had let AIG fail.”