Week InAdvance: September 14, 2015
Federal Reserve governors meet this week to consider raising lending rates for the first time since the 2008 credit crisis, amid discussions on whether Dodd-Frank Act limits on the central bank's ability to respond to economic distress went too far -- or not far enough. Senators Elizabeth Warren David Vitter have been invited to provide congressional perspectives on reforming the Fed's lending authority at a forum set for Wednesday at the Cato Institute, a Washington-based policy research group that champions free markets. Massachusetts Democrat Warren and Louisiana Republican Vitter are co-sponsors of the Bailout Prevention Act of 2015, legislation that would go beyond Dodd-Frank by requiring that emergency aid be broad-based, denied to insolvent financial institutions and carry penalty interest rates. A companion bill has been introduced in the House; neither has advanced. Dodd-Frank required that emergency loans from the Fed go toward liquidity in the overall system rather than to individual banks. The central bank has yet to implement restrictions, and officials have said they favor preserving their power to address a crisis.
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