Federal Reserve says it doesn't have enough control over economy; wants more

[pimf]

Didn't they just bail out one of their Wall Street losers? Create a crisis, offer the solution; the same mo over and over.

Source Washington Post (http://www.washingtonpost.com/wp-dyn/content/article/2008/06/18/AR2008061803225.html?hpid=topnews)


Treasury Secretary Henry M. Paulson Jr. plans to call today for the Federal Reserve to be given new, explicit powers to intervene in the workings of Wall Street firms to protect the financial system, adapting his vision of how the financial world should be regulated to reflect the lessons of the collapse of Bear Stearns.

"Our nation has come to expect the Federal Reserve to step in to avert events that pose unacceptable systemic risk," Paulson plans to say in a speech today, according to prepared remarks obtained by The Washington Post. But the central bank "has neither the clear statutory authority nor the mandate to anticipate and deal with risks across our entire financial system."

"We should quickly consider how to appropriately give the Fed the authority to access necessary information from highly complex financial institutions and the responsibility to intervene in order to protect the system," Paulson plans to say, "so they can carry out the role our nation has come to expect."

[chrisvet]

Didn't they just bail out one of their Wall Street losers? Create a crisis, offer the solution; the same mo over and over.

Source Washington Post (http://www.washingtonpost.com/wp-dyn/content/article/2008/06/18/AR2008061803225.html?hpid=topnews)


Can't wait to hear Paj's take on this. He for one has a beef with the fed because they 'fail at predicting.'

Now if we can only convince him they manufacture booms & busts so their buddies can reap the benifits of buying out banks / corps for pennies on the dollar, we've succeeded. :lol:

[Pajman]

1. The US Secretary of Treasury is not part of the Fed.
2. This is not about the Fed gaining more control over the economy; it's about the System gaining the authority to retrieve necessary information from financial institutions (which operate 'recklessly' under the assumption that the Fed has no choice but to "bail" them out in case of a crises).

This won't solve anything either way. A financial crises is bound to happen in an economy where its participants are financially irresponsible. No monetary authority can cure ignorance.

[pimf]

Can't wait to hear Paj's take on this.

Now if we can only convince him they manufacture booms & busts so their buddies can reap the benifits of buying out banks / corps for pennies on the dollar, we've succeeded. :lol:

Well obviously my take on it is that the yes I do believe this is an engineered crisis and I think this call for the Fed to hold more control is because we probably aren't going to be able to control the landing as Wall Street would like and they are going to need to be more bailouts in the very near future.

I'm afraid I won't be much in the way of help in a debate though so it looks like you're on you're own here buddy.


This is not about the Fed gaining more control over the economy; it's about the System gaining the authority to retrieve necessary information from financial institutions (which operate 'recklessly' under the assumption that the Fed has no choice but to "bail" them out in case of a crises).


Isn't that like...communism? It definitely doesn't sound like a free market.

[Pajman]

Isn't that like...communism? It definitely doesn't sound like a free market.
We don't live in a free market economy.

[Chupacabra]

We don't live in a free market economy.
yeah Woodrow Wilson sold out the economy to the central bank aka the federal reserve along time ago.


The central bank idea is right out of the communist manifesto our economy hasn't been free market in a very very long time.

[shade]

1. The US Secretary of Treasury is not part of the Fed.
2. This is not about the Fed gaining more control over the economy; it's about the System gaining the authority to retrieve necessary information from financial institutions (which operate 'recklessly' under the assumption that the Fed has no choice but to "bail" them out in case of a crises).

This won't solve anything either way. A financial crises is bound to happen in an economy where its participants are financially irresponsible. No monetary authority can cure ignorance.

And bail outs encourage irresponsibility.

[chrisvet]

And bail outs encourage irresponsibility.

Bail out: creating innefficiency by rewarding a poorly managed business with the fruits of her competition. In the end, everyone loses due to higher costs / prices / taxes.

[Nocturnal]

This is neccessary.

We were forced to bail out the banks. They deserved to go down in a blaze of fail but the impact to our economy would have been to great. So in order to avoid the moral hazard of less responsibility the government must monitor the industry more closely. There is no free lunch. They fucked up, it cost us billions, now we need to monitor the retards who did this.

[pimf]

This is neccessary.

We were forced to bail out the banks. They deserved to go down in a blaze of fail but the impact to our economy would have been to great. So in order to avoid the moral hazard of less responsibility the government must monitor the industry more closely. There is no free lunch. They fucked up, it cost us billions, now we need to monitor the retards who did this.

Yeah, from what I've read you are correct. But to give the power to the Fed? Isn't that like the fox guarding the chicken coup?

[Nocturnal]

Yeah, from what I've read you are correct. But to give the power to the Fed? Isn't that like the fox guarding the chicken coup?

Seems like a major increase in their power. I'd like to know the logic behind giving that job to the fed versus the SEC, treasury etc.

[Pajman]

And bail outs encourage irresponsibility.
I already made that point. :wave:
Seems like a major increase in their power. I'd like to know the logic behind giving that job to the fed versus the SEC, treasury etc.
That's a good question. The SEC's job is to regulate the equity market and other securities related issues. The Treasury's job is to handle fiscal revenue and regulate the financial industry. One of the Fed's jobs specifically is to address financial (especially banking) crises. The Fed is also the only one that has the authority to actually do something about it.