Atlantic Economic Journal

, Volume 42, Issue 1, pp 21–38 | Cite as

Are the Bailouts of Wall Street Complements or Substitutes?

Article

Abstract

The Term Securities Lending Facility (TSLF) lent $2.3 trillion worth of general collateral to 18 investment houses in exchange for riskier securities. Treasury collateral was in high demand in 2008 and 2009 as repo markets shunned lower quality collateral. This paper finds a negative and significant relationship between participating in the TSLF and having funds from the Troubled Asset Relief Program (TARP) and other Federal Reserve lending programs. Thus, it appears that the TSLF was a substitute for other bailouts. In addition, dealers with higher paid CEOs were more likely to borrow in the next TSLF auction cycle.

Keywords

Bailout Banks Capital Purchase Program (CPP) CEO pay Discount window Dodd–Frank Wall Street Reform Act of 2010 Emergency lending 

JEL

G01 G18 G2 G24 G28 

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Copyright information

© International Atlantic Economic Society 2014

Authors and Affiliations

  • Linus Wilson
    • 1
  • Yan Wendy Wu
    • 2
  • Stephanie Prejean
    • 3
  1. 1.Department of Economics & Finance, B. I. Moody III College of BusinessUniversity of Louisiana at LafayetteLafayetteUSA
  2. 2.Department of Economics, School of Business and EconomicsWilfrid Laurier UniversityWaterlooCanada
  3. 3.Department of Economics & Finance, B. I. Moody III College of BusinessUniversity of Louisiana at LafayetteLafayetteUSA

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