Rather than raising its discount rate, the Fed enacted macroprudential (i.e., regulatory) measures aimed at constraining the supply of credit via banks. Some of these regulatory measures included lowering the acceptance rate for loans and increasing supervision of credit facilities.23 The Fed publicly released a letter it had written to regional banks, deriding the “excessive amount of the country’s credit absorbed in speculative security loans” and threatening that banks attempting to borrow money from the Fed in order to fund such loans might be refused.24 But these policies were largely
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