IDEAS home Printed from https://ideas.repec.org/p/lev/wrkpap/wp_735.html
   My bibliography  Save this paper

The Impact of Financial Reform on Federal Reserve Autonomy

Author

Listed:
  • Bernard Shull

Abstract

The Federal Reserve has been criticized for not preventing the risky behavior of large financial companies prior to the financial crisis of 2008-09, for approving mergers that aggravated the "too big to fail" problem, and for its substantial contribution to bailouts when their risk management failed. The Dodd-Frank Act of 2010, in attempting to diminish financial instability and eliminate too-big-to-fail policies, has established a new regulatory framework and laid out new responsibilities for the Federal Reserve. In doing so, it appears to address criticisms of the central bank by constricting its autonomy. The law, however, has also extended the Federal Reserve's supervisory authority and expanded its capacity to exercise regulatory control over its extended domain. This new authority is in addition to the augmentation of its monetary powers over the past several years. This paper reviews and evaluates both constraints imposed on the Federal Reserve by the Dodd-Frank Act and the expansion of Federal Reserve authority. It finds that the constraints are unlikely to have much impact, but the expansion of authority constitutes a significant increase in power and influence. The paper concludes that the expansion of Federal Reserve authority invites questions about the organizational design and governance of the central bank, and its traditional autonomy.

Suggested Citation

  • Bernard Shull, 2012. "The Impact of Financial Reform on Federal Reserve Autonomy," Economics Working Paper Archive wp_735, Levy Economics Institute.
    • Handle: RePEc:lev:wrkpap:wp_735
    as

    Download full text from publisher

    File URL: http://www.levyinstitute.org/pubs/wp_735.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bernard Shull, 2010. "Too Big to Fail in Financial Crisis: Motives, Countermeasures, and Prospects," Economics Working Paper Archive wp_601, Levy Economics Institute.
    2. Bernard Shull, 1995. "Federal Reserve Independence: What Kind and How Much?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 18(2), pages 211-230, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Donato Masciandaro, 2016. "More than the Human Appendix: Fed Capital and Central Bank Financial Independence," BAFFI CAREFIN Working Papers 1635, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bernard Shull, 2014. "Financial Crisis Resolution and Federal Reserve Governance: Economic Thought and Political Realities," Economics Working Paper Archive wp_784, Levy Economics Institute.
    2. Barth, James R. & Prabha, Apanard & Swagel, Phillip, 2012. "Just How Big Is the Too Big to Fail Problem?," Working Papers 12-06, University of Pennsylvania, Wharton School, Weiss Center.
    3. Juan David Vega Baquero & Miguel Santolino, 2021. ""Too big to fail? An analysis of the Colombian banking system through compositional data"," IREA Working Papers 202111, University of Barcelona, Research Institute of Applied Economics, revised Apr 2021.
    4. Toma Sorin-George & Gradinaru Catalin, 2018. "Too Big To Fail Banks In The Age Of Globalization," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 0, pages 131-136, December.
    5. Barth, James R. & Prabha, Apanard Penny, 2014. "An Analysis of Resolving Too-Big-to-Fail Banks Throughout the United States," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 44(1).
    6. Vega Baquero, Juan David & Santolino, Miguel, 2022. "Too big to fail? An analysis of the Colombian banking system through compositional data," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 3(2).
    7. Mettenheim Kurt, 2013. "Back to Basics in Banking Theory and Varieties of Finance Capitalism," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 3(3), pages 357-405, May.
    8. Umlauft, Thomas, 2014. "The Paradoxical Genesis of Too-Big-To-Fail," MPRA Paper 99301, University Library of Munich, Germany.

    More about this item

    Keywords

    Financial Crisis; Federal Reserve; Government Policy and Regulation;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lev:wrkpap:wp_735. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Elizabeth Dunn (email available below). General contact details of provider: http://www.levyinstitute.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.