During the 2008 Financial Crisis, the US government and the Federal Reserve had three options in dealing with failing financial institutions.

3. During the 2008 Financial Crisis, the US government and the Federal Reserve had three options in dealing with failing financial institutions. Using the concepts covered in our lectures, discuss the advantages and disadvantages of each option.

A. Arranging an acquisition of a failing financial institution (e.g. Bear Stearns)

B. Bailing out a failing financial institution (e.g. AIG, Fannie and Freddie)

C. Letting a failing financial institution declare bankruptcy (e.g. Lehman