Moral suasion is the use of influence to affect behavior. Business moral suasion is most often associated with public statements by individuals with authority, ADVERTISING campaigns, and educational programs. President John F. Kennedy attempted moral suasion in his classic statement, “Ask not what your country can do for you. Ask what you can do for your country.” The powerful antismoking campaigns by the American Legacy Foundation and others since the 1999 tobacco settlement also provide examples of moral suasion. In addition to ad campaigns, educational programs and testimonials from respected community, sports, and entertainment leaders are among the most effective moral-suasion efforts. One of the major users of moral suasion is the FEDERAL RESERVE SYSTEM (often called the Fed). Many times the Fed, usually through statements by its chairman, will suggest what they would like banks to do or not do, without instituting a regulation or policy. In 1999 the Fed’s chairman, Alan Greenspan, used the famous phrase “irrational exuberance” when describing the skyrocketing STOCK MARKET prices of technology companies. In 2002 Mr. Greenspan suggested that STOCK OPTIONS given to executives be included as a cost in company accounting practices. In both instances he was stating his opinion on subjects that were related to banking and finance but out of his sphere of control, MONETARY POLICY. In effect, he was attempting to use moral suasion to influence others. In 1998 the Federal Reserve initiated a major moralsuasion effort when it intervened in the rescue of the international HEDGE FUND Long Term Capital Management (LTCM). In “Costs and Benefits of Moral Suasion: Evidence from the Rescue of Long Term Capital Management,” Craig Furfine suggests that the Fed’s use of moral suasion to prevent the liquidation of LTCM may not have been necessary. The Fed organized and hosted a series of meetings between LTCM and 14 institutions, including nine large commercial banks that ultimately provided the financial resources to bail out the hedge fund. The Fed itself did not provide funding; instead it persuaded lenders to provide funds, and the Federal Reserve Bank of New York, through provision of its “good offices,” facilitated the rescue. In fact, financial leaders worked through the critical weekend to put together a plan. The Fed’s use of moral suasion was based on the idea of “too big to fail,” the perception that failure of the hedge fund would destabilize financial markets and create a domino effect, threatening the solvency of commercial banks and other financial institutions.