Thus, Federal Reserve loans that are collateralized by riskier securities are quite small compared with our holdings of assets with little or no credit risk. Second, and more important, these financial risks were the result of actions taken to avert what likely would have been a substantial further intensification of the financial crisis, with potentially dire economic consequences.
All that said, we undertook these operations with great discomfort and only because the United States has no workable legal framework for winding down systemically critical financial institutions in a way that would allow firms to fail and their creditors to lose money without inflicting massive damage on the financial system.