Alex Tomczuk - Fundamental Weakness of Fed - CENTRAL CONNECTICUT STATE UNIVERSITY Federal Reserve Reform Deregulation Prevents Growth Alex Tomczuk This

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

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CENTRAL CONNECTICUT STATE UNIVERSITY Federal Reserve Reform Deregulation Prevents Growth Alex Tomczuk This paper examines legislation passed and/or proposed before the Great Recession and after the Great Recession directed at the Federal Reserve. This legislation is weighed for its pros and cons, while making a final conclusion as to the future of the Fed.
Running head: FED RESERVE REFORM Table of Contents I NTRODUCTION 2 F INANCIAL L EGISLATION PRE -G REAT R ECESSION 3 Federal Reserve Act of 1913 4 Bank Holding Act of 1956……………………………………………………………………………….. 4 Monetary Control Act of 1980………………………………………………………………………….. 5 F INANCIAL L EGISLATION POST -G REAT R ECESSION …………………………………………….7 Public Law 113-250……………………………………………………………………………… ……...8 Consumer Financial Protection Safety & Soundness Improvement Act of 2011……………… .... 9 Federal Oversight Modernization Act of 2015……………………………………………………… 10 Federal Reserve Transparency Act of 2015…………………………………………………………. 11 C ONCLUSIONS …………………………………………………………………………………...13 1
Running head: FED RESERVE REFORM I NTRODUCTION Neel 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 was tasked by Treasury Secretary Henry Paulson to create and manage the Troubled Asset Relief Program (Augustine, 2015). Additionally, Kashkari has served as Vice President of Goldman Sachs in San Francisco and has dabbled with investment banking at Pacific Investment Management Company from 2009 – 2013 (Davidson & Das, 2016). To think…another Wall Street executive leading one of the most important institutions in the world; thereby, adding fuel to Senator Sanders criticism about Wall Street’s influence in the United States. Fortunately, Neel Kashkari 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 the costs 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 with key regulatory powers directed 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’t happen again” (Davidson & Das, 2016). Kashkari may be one of the few current Federal Open Market Committee (FOMC) members that has outwardly denounced the Fed’s influence in this realm; but, his criticism resonates throughout many academics, economists, and politicians. As a

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