Fed Can and Should Take More Risk Than It Did During '08 Crisis, Tarullo Says

The transcript discusses the Federal Reserve's role in taking on more risk during a crisis, comparing it to the great financial crisis where no Fed facility needed Treasury funds. It highlights the need for the Fed to be prepared for potential losses, especially with facilities like the Main Street facility, which are backed by the Treasury. The Fed should be ready to set up non-profitable facilities as long as they are supported by Treasury equity.

What is the main reason the speaker believes the Fed should take more risk during the current crisis?

• The Treasury is providing a backstop.

• The Fed has a new leadership team.

• The crisis is less severe than before.

• The Fed has unlimited resources.

During the great financial crisis, what was notable about the Fed's use of Treasury funds?

• The Fed borrowed additional funds from the Treasury.

• The Treasury funds were insufficient.

• The Fed did not need to use any Treasury funds.

• The Fed used all the Treasury funds available.

What does the speaker imply about the Main Street facility?

• It may incur losses.

• It is not needed in the current crisis.

• It will definitely be profitable.

• It will not be supported by the Treasury.

Why does the speaker believe the Fed should set up a facility that might not be profitable?

• The Fed has excess funds.

• The facility will eventually become profitable.

• The Treasury's equity provides reassurance.

• The Fed wants to experiment with new strategies.

What is the speaker's view on the Fed's preparedness for losses?

• The Fed should only focus on profitable ventures.

• The Fed should be ready for losses backed by the Treasury.

• The Fed should avoid any risk.

• The Fed should rely on private investors for support.