Date Added: Sep 2009
This paper examines government policies aimed at rescuing banks from the effects of the great financial crisis of 2007-2009. To delimit the scope of the analysis, the authors concentrate on the fiscal side of interventions and ignore, by design, the monetary policy reaction to the crisis. The policy response to the sub-prime crisis started in earnest after Lehman's failure in mid September 2008, accelerated after February 2009, and has become very large by September 2009. Governments have relied on a portfolio of intervention tools, but the biggest commitments and outlays have been in the form of debt and asset guarantees, while purchases of bad assets have been very limited.