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It's been primarily a liquidity crisis that was created when the asset values were hard/impossible to measure. This resulted in capital impairment as loan loss reserves became impossible to determine. That created a need to de lever.

That produced a credit crunch, because the easiest way to de lever is not to put new money out. A viscous cycle developed where institutions didn't trust the safety and liquidity of other Banks. So, cash flows among banks and businesses stopped. That in turn cascaded and created more capital and liquidity problems.

It got very serious as you know. Before Trust and Confidence comes back, capital and liquidity have to be restored.

Why do we have to act? Because we are the country - we are the government. We are the final go to part of this equation. There is no - one else. And - the financial system is our field of play. A football team needs a field. We do also. The financial system is also like our veins and arteries - without them, we bleed out.


North Carolina National Bank(NCNB), which is now BoA, came to Texas in '89, where NCNB stood for 'No Cash For Nobody'
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