Fed's Critical Moments: Kohn on the 1987 Market Crash

The transcript discusses Alan Greenspan's proactive approach to crisis management, highlighting his efforts to prepare for potential financial crises by assembling contingency plans. It details the market tensions and reactions leading up to a significant stock market decline, and the Federal Reserve's decision-making process in response. The importance of issuing a clear statement to stabilize markets is emphasized, along with the need for financial system resilience, particularly in non-bank sectors. The transcript concludes with strategies for managing crises, focusing on liquidity provision and addressing moral hazard concerns.

In what ways can policymakers prevent future financial crises based on past experiences?

What steps are being taken to improve the resilience of the non-bank financial system?

How did the Federal Reserve respond to the liquidity demands during the crisis?

What are the moral hazard issues associated with providing liquidity during a crisis?