I am Superman: The Federal Reserve Board and the Neverending Crisis

Networks Financial Institute Policy Brief 2010-PB-03

40 Pages Posted: 25 Aug 2010 Last revised: 27 Sep 2010

See all articles by Richard Christopher Whalen

Richard Christopher Whalen

Whalen Global Advisors LLC; Economic Advisory Committee of FINRA; National Mortgage News; National Association of Business Economists (NABE)

Date Written: August 1, 2010

Abstract

This article asserts that, in dealing with the 2007-2009 financial crisis, the Federal Reserve Bank (Fed) has placed its role as monetary agency and de facto steward of the market for U.S. Treasury debt ahead of its statutory responsibility for ensuring the soundness of the private banks. This is not to say that the Fed supplies whatever credit the government wants - at least not yet - but in terms of both the provision of credit to the private financial system and the price of this credit, the growing fiscal imbalances of the U.S. government seem to be playing an increasing role in Fed policy decisions. This paper explores some of the issues involved in recent Fed policy decisions and draws some preliminary conclusions as to the conflicts between the Fed’s role as central bank and also as prudential supervisor.

Keywords: Federal Reserve, Monetary Policy, Bank Supervision, Systemic Risk, Federal Deposit Insurance, Credit Default Swaps, Over the Counter, Derivatives

Suggested Citation

Whalen, Richard Christopher, I am Superman: The Federal Reserve Board and the Neverending Crisis (August 1, 2010). Networks Financial Institute Policy Brief 2010-PB-03, Available at SSRN: https://ssrn.com/abstract=1664569 or http://dx.doi.org/10.2139/ssrn.1664569

Richard Christopher Whalen (Contact Author)

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