Fed Gets More Power

Wall Street Journal

After fending off most challenges to its independence and winning new powers to oversee big financial firms, the Federal Reserve has emerged from a bruising debate on the overhaul of U.S. financial rules as perhaps the pre-eminent regulator in the sector. But that could only bring it added blame if things go wrong again.

Just a few months ago, amid populist anger at the Fed for failing to prevent the financial crisis of 2008 and bailing out Wall Street, Congress was talking of stripping the central bank of its supervisory oversight of banks or forcing it to submit to congressional audit of its interest-rate decisions.

Instead, the new law gives the Fed more power and a better tool box to help prevent financial crises. It will become the primary regulator for large, complex financial firms of all kinds, such as American International Group, the insurer which built a massive derivatives portfolio that regulators didn't see until it was too late.

After the Federal Reserve caused the 2008 crisis, a push was made by many in the liberty movement to have their power greatly reduced by revealing their true dealings.  Ron Paul introduced his legislation, the Federal Reserve Transparency Act, was introduced in February of 2009.  It had over 300 co-sponsors.  Paul was getting interviews on national syndicated shows like Glenn Beck, and was appearing on every major new network.  The message that the Federal Reserve was a danger to the US economy was growing. 

Then, the Financial Regulations bill was introduced and debated.  The blame, some rightfully deserved, was placed upon Wall Street again.  The Senate passed the bill after completely watering it down.  The Fed has been given more arbitrary powers over the financial sector, being made the primary regulator for the Too Big To Fail banks.  The same banks that the Fed loaned artificially cheap money, enabling the fraud and leveraging Wall Street revelled in.  The Fed has been completely forgotten by the mainstream media, leaving the bill wide open to give more powers to the direct cause.  I urge everyone reading, however few that may be, to contact their state representatives and let them know that this cannot be tolerated, and it must be nullified immediately.  Let them know it would be good for the to do some light reading by suggesting Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse and End the Fed.