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Lessons Learned: William Nelson, Sandra Ward

Journal of Financial Crises

William Nelson was deputy director, Division of Monetary Affairs, at the Federal Reserve Board during the Global Financial Crisis of 2007–09 (GFC). As the nation’s central bank, chief financial regulator, and lender of last resort, the Federal Reserve Board took the lead in setting monetary policy and stabilizing the financial system during the crisis.

Nelson’s responsibilities at the Fed during the crisis included analysis of monetary policy and discount window policy as well as financial institution supervision, and he regularly briefed the board and the Federal Open Market Committee. He developed special expertise in designing liquidity facilities and was a …

Lessons Learned: Robert Hoyt, Esq., Yasemin Esmen

Journal of Financial Crises

Robert Hoyt was General Counsel at the U.S. Department of Treasury between 2006 and 2009. He oversaw legal aspects of policies implemented to manage the crisis, including the rescues of Bear Stearns, AIG, and the U.S. Auto industry, the conservatorship of Fannie Mae and Freddie Mac, and the failure of Lehman Brothers, as well as the creation and implementation of the Troubled Asset Relief Program (TARP.) This Lessons Learned is based on a phone interview with Mr. Hoyt.

The Rescue Of American International Group Module F: The Aig Credit Facility Trust, Alec Buchholtz, Aidan Lawson

Journal of Financial Crises

In September 2008, American International Group, Inc. (AIG) experienced a liquidity crisis. To avoid the insurance giant’s bankruptcy, the Federal Reserve Bank of New York (FRBNY) extended an $85 billion emergency secured credit facility to AIG. In connection with the credit facility, AIG issued 100,000 shares of preferred stock, with voting rights equal to and convertible into 79.9% of the outstanding shares of AIG common stock, to an independent trust (the Trust) set up by the FRBNY. Three trustees held the stock for the sole benefit of the US Treasury, exercised the rights, powers, authorities, discretions, and duties of the …

The Rescue Of American International Group Module A: The Revolving Credit Facility, Alec Buchholtz, Aidan Lawson

Journal of Financial Crises

On September 15, 2008, the big three rating agencies downgraded AIG’s credit ratings multiple levels, exacerbating liquidity strains that the company was experiencing due to increasing cash demands by securities borrowers and collateral calls by credit default swap (CDS) customers. To prevent AIG from filing for bankruptcy, the Federal Reserve (the Fed) announced on the following day that, pursuant to its emergency powers, it would provide the company with an $85 billion Revolving Credit Facility (RCF). The RCF was secured by AIG assets and interests in its subsidiaries and required AIG to grant the US Department of the Treasury a …