Monetary policy - conventional and unconventional : taming the financial crisis
Induced by the Great Recession of 2007-2009, and especially by the 2008 financial crisis, the Federal Reserve (Fed) undertook unconventional policies that probably saved the financial system from meltdown, but may have effected far-reaching consequences for years ahead. Quite apart from fulfilling its mandates to promote economic growth and maintain stable prices, the Fed made loans to specific financial institutions, accepted hitherto ineligible collateral, and purchased bonds that vastly enlarged its balance sheet and created unprecedented levels of excess bank reserves. How these events came to pass and their possible consequences - including potential inflation and loss of the Federal Reserve independence - are described in this article. (original abstract)
- Bernanke, B.S., 2008, Liquidity Provision by the Federal Reserve, speech at the Federal Reserve Bank of Atlanta Financial Markets Conference, Sea Island, Georgia, May 13, http://www.federalreserve.gov/newsevents/speech/bernanke20090403a.htm.
- Bernanke, B.S., 2009, The Federal Reserve's Balance Sheet, speech at the Federal Reserve Bank of Richmond 2009 Credit Markets Symposium, Charlotte, North Carolina, April 3, http://www.federalreserve.gov/newsevents/speech/bernanke20090403a.htm.
- Bernanke, B.S., 2011a, Implementation of the Dodd-Frank Act, testimony Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, Washington, D.C., February 17, http://www.federalreserve.gov/newsevents/testimony/bernanke20110217a.htm.
- Bernanke, B.S., 2011b, Fiscal Sustainability, speech at the Annual Conference of the Committee for a Responsible Federal Budget, Washington, D.C., June 14, http://ww w.federalreserve.gov/newsevents/speech/bernanke20110614a.htm.
- Carlson, J.B., Lindner, J., 2009, The Changing Composition of the Fed's Balance Sheet, Economic Trends (August 31), The Federal Reserve Bank of Cleveland, http://www.clevelandfed.org/research/trends/2009/0909/02monpol.cfm.
- Committee on Capital Markets Regulation, 2006, Interim Report, 2010, November 30.
- Congressional Budget Office 2011, Net Interest Outlays, 1940-2020.
- Fed, 2011a, Credit and Liquidity Programs and the Balance Sheet, http://www.federalreserve.gov/monetarypolicy/bst.htm.
- Fed, 2011b, Minutes of FOMC Meeting, April 26-27, http://www.federalreserve.gov/monetarypolicy/fomcminutes20110427.htm.
- Federal Reserve Bank of Cleveland, 2011, Indicators & Data, http://www.clevelandfed.org/research/data/index.cfm.
- Federal Reserve Bank of St. Louis, 2011a, Monetary Trends.
- Federal Reserve Bank of St. Louis, 2011b, National Economic Trends.
- Federal Reserve Bank of St. Louis, 2011c, Low Interest Rates Have Benefits and Costs, Inside the Vault, Spring.
- Feldstein, M., 2011, Quantitative Easing and America's Economic Rebound, The China Daily, February 28.
- Financial Crisis Inquiry Commission, 2010, Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States, submitted by the Financial Crisis Inquiry Commission.
- Fisher, R.W., 2010, Paradise Lost: Addressing Too Big to Fail, Cato Journal, April 1.
- Gascon, C.S., 2009, Federal Reserve Assets: Understanding the Pieces of the Pie, Economic Synopses, no. 13.
- Kliesen, K., 2009, Recession or Depression, Economic Synopses, no. 15.
- Senate Committee on Banking and Urban Affairs, 2002, Sarbanes Oxley Act.
- Senate Committee on Banking and Urban Affairs, 2009, Brief Summary on the Dodd-Frank Wall Street Reform and Consumer Protection Act.
- Standard & Poor's, 2011, http://www.standardandpoors.com/indices.
- Thornton, D.L., 2009, The Fed, Liquidity and Asset Allocation, St. Louis Federal Reserve Bank Review, January/February, pp. 13-21.
- Wallison, P.J., 2009, Barney Frank, Predatory Lender, Wall Street Journal, October 15.
- Wallison, P.J., Calamari, C.Z.W., 2008, Blame Barney Frank and the Congress for the Credit Mess, Wall Street Journal, September 23.