Federal Reserve and Government Agency Links
Keeping Track of
the Financial Crisis
James Bullard speaks on the origins of the financial crisis:
|»||"What Challenges Do We Face for Regulatory Reform?" June 15, 2009. Video | Transcript|
|»||"Did the Fed Leave Interest Rates Too Low for Too Long?" June 11, 2009. Video | Transcript|
|»||"What Happened?" June 9, 2009. Video | Transcript|
Frequently Asked Questions about the Financial Crisis
The financial crisis has interfered with the Fed's ability to operate a conventional monetary policy. Lender-of-last-resort measures have been a primary focus. The FOMC has reduced its target for t...
Monetary policy remains potent. Even with the fed funds rate at zero, the Fed can continue to influence financial markets and the economy through open market operations and various lending programs...
The U.S. Treasury Department outlines a framework for comprehensive regulatory reform that focuses on containing systemic risks in the financial system. The framework calls for assigning responsibility over all systemically-important firms and critical payment and settlement systems to a single independent regulator. Further, it calls for higher standards on capital and risk management for systemically-important firms; for requiring all hedge funds above a certain size to register with a financial regulator; for a comprehensive framework of oversight, protection and disclosure for the over-the-counter derivatives market; for new requirements for money market funds; and for stronger resolution authority covering all financial institutions that pose systemic risks to the economy.
The U.S. Treasury Department proposes legislation that would grant the U.S. government authority to put certain financial institutions into conservatorship or receivership to avert systemic risks posed by the potential insolvency of a significant financial firm. The authority is modeled on the resolution authority that the FDIC has with respect to banks and that the Federal Housing Finance Agency has with regard to the GSEs. The authority would apply to non-bank financial institutions that have the potential to pose systemic risks to the economy but that are not currently subject to the resolution authority of the FDIC or the Federal Housing Finance Agency.
The Federal Reserve and the U.S. Treasury issue a joint statement on the appropriate roles of each during the current financial crisis and into the future, and on the steps necessary to ensure financial and monetary stability. The four points of agreement are 1) The Treasury and the Federal Reserve will continue to cooperate in improving the functioning of credit markets and fostering financial stability; 2) The Federal Reserve should avoid credit risk and credit allocation, which are the province of fiscal authorities; 3) The need to preserve monetary stability, and that actions by the Federal Reserve in the pursuit of financial stability must not constrain the exercise of monetary policy as needed to foster maximum sustainable employment and price stability; and 4) The need for a comprehensive resolution regime for systemically critical financial institutions. In addition, the Treasury will seek to remove the Maiden Lane facilities from the Federal Reserve's balance sheet.