Alex Tomczuk - Fundamental Weakness of Fed - CENTRAL...

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CENTRAL CONNECTICUT STATE UNIVERSITYFederal Reserve ReformDeregulation Prevents GrowthAlex TomczukThis paper examines legislation passed and/or proposed before the Great Recession and afterthe Great Recession directed at the Federal Reserve. This legislation is weighed for its prosand cons, while making a final conclusion as to the future of the Fed.
Running head: FED RESERVE REFORMTable of ContentsINTRODUCTION2FINANCIALLEGISLATIONPRE-GREATRECESSION3Federal Reserve Act of 19134Bank Holding Act of 1956………………………………………………………………………………..4Monetary Control Act of 1980…………………………………………………………………………..5FINANCIALLEGISLATIONPOST-GREATRECESSION…………………………………………….7Public Law 113-250……………………………………………………………………………………...8Consumer Financial Protection Safety & Soundness Improvement Act of 2011………………....9Federal Oversight Modernization Act of 2015………………………………………………………10Federal Reserve Transparency Act of 2015………………………………………………………….11CONCLUSIONS…………………………………………………………………………………...131
Running head: FED RESERVE REFORMINTRODUCTIONNeel Kashkari is now the President of the Federal Reserve Bank of Minneapolis.Kashkari originally served as Assistant Secretary of the Treasury (2006 – 2009), where he wastasked by Treasury Secretary Henry Paulson to create and manage the Troubled Asset ReliefProgram (Augustine, 2015). Additionally, Kashkari has served as Vice President of GoldmanSachs in San Francisco and has dabbled with investment banking at Pacific InvestmentManagement Company from 2009 – 2013 (Davidson & Das, 2016). To think…another WallStreet executive leading one of the most important institutions in the world; thereby, adding fuelto Senator Sanders criticism about Wall Street’s influence in the United States. Fortunately, NeelKashkari represents a turning point for heterodox thinking in this country.Kashkari surprised the country with his latest speech that encourages breaking up the“too big to fail” banks and the passing of legislation to ensure that taxpayers don’t assume thecosts associated with bailouts. Kashkari is sparking a debate within the Federal Reserve (“Fed”)and intends to persuade Congress to enact laws that provide the Fed withkeyregulatory powersdirected towards controlling the financial sector. Kashkari understands that his hopes are high;however, he seeks to eliminate “a false sense of security [in Congress] that this [bailouts] can’thappen again” (Davidson & Das, 2016). Kashkari may be one of the few current Federal OpenMarket Committee (FOMC) membersthat has outwardly denounced the Fed’s influence in thisrealm; but, his criticism resonates throughout many academics, economists, and politicians. As aresult, these thoughts raise important ideas that must be considered when evaluating the Fed’srole in stabilizing the US financial system.Some of thekeyissues raised reflect on interestconflicts, an inability to adequately regulate the financial industry, and a lack oftransparency.

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Term
Spring
Professor
Jared Ragusett
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