According to the
Wall Street Journal, the Federal Reserve “has operated almost entirely behind
closed doors as it rewrites the rule book governing the U.S. financial system.”
The paper notes that this has been in sharp contrast to the trend at the Fed
toward greater transparency in its interest-rate policies and emergency-lending
programs. The complaint of a dearth of public meetings misses, however, not
only the scripted nature of such displays, but also the more fundamental
question of whether a central bank buffered from political pressure should play
such a salient role as regulator. At the very least, the democratic deficit and
a lack of accountability may be exacerbated by the Fed’s greater role as a
regulator of banks—particularly after the major investment banks become
commercial banks, and thus subject to the Fed’s regulations.
The full essay is at "The Federal Reserve as a Regulator of Banks: An Institutional Conflict of Interest."
Related books:
Essays on the Financial Crisis
Institutional Conflicts of Interest
