24 Pages Posted: 28 Sep 2009
Date Written: September 28, 2009
In the Spring of 2008, the United States Federal Reserve Bank, under the Chairmanship of Ben Bernanke, took emergency measures in an attempt to forestall a national, if not international, economic meltdown. The actual effectiveness of these unprecedented measures has been hotly-debated. Unfortunately, regardless of their efficacy, the Federal Reserve acted outside the scope of its legal authority in taking several of these actions.
This essay will analyze how the Federal Reserve (the “Fed”) violated the law and, in doing so, will examine how these illegal actions have comprised the authority that Congress has granted to the Fed. In order to place this malfeasance into context, the essay will examine the origins of the Federal Reserve System and how this unique entity has dramatically (and often controversially) expanded the scope of its power.
Finally, the essay will analyze how the Fed’s willful violation of the law has critically undermined the United States economy in both the short and long-term. It will conclude by offering a proposed legislative reform that would begin to resolve this problem by placing the secretive maneuvers of the Fed into the full light of public scrutiny.
Ultimately, when viewed objectively and within historical context, it is clear that the Federal Reserve Bank has acted beyond the scope of its legislative authority and, by doing so, has harmed the financial interests of the United States both here and abroad. This warrants, at the very least, a full and independent audit of the Federal Reserve System to determine its compliance with existing law.
Suggested Citation: Suggested Citation
Emerson, Chad D., The Illegal Actions of the Federal Reserve: An Analysis of How the Nation’s Central Bank has Acted Outside the Law in Responding to the Current Financial Crisis (September 28, 2009). Available at SSRN: https://ssrn.com/abstract=1479670 or http://dx.doi.org/10.2139/ssrn.1479670