In the near future, the start of a global recession caused expectations of severe economic difficulties for the US.As a by-product, this economic weakness produced a dramatic decline in commodity prices, affecting multiple types of financial institutions.Specifically, many hedge funds in the US, some of them owned or supported by large commercial and investment banks, found themselves holding assets with rapidly declining values.

In this situation, what are the concerns of the Federal Reserve and what kind of actions could it take?

Answer rating: 100% (QA)

In a situation where there is an expectation of severe economic difficulties coupled with a dramatic decline in commodity prices and financial institutions including hedge funds holding assets with ra... View the full answer