These institution-specific interventions were deemed necessary by the Fed and the Bush administration because they believed that there were no adequate procedures in place for liquidating the assets of systemically important financial institutions in an orderly fashion. The Dodd-Frank Act passed in 2010 provides these procedures. Simultaneously – and correctly – the Dodd-Frank Act removes the Fed’s ability to engage in institution-specific assistance.
The act does leave in place the Fed’s ability to engage in broad-based market interventions of the kind that I’ve described, albeit with more congressional and White House oversight. Cutting interest rates I’ve talked about how the fall in land prices generated a sharp increase in risk perceptions in financial markets and how that in turn led to a financial crisis.