Federal Reserve

[TxDsnyGrl74]

http://au.youtube.com/watch?v=JAcjTqLBuzA&NR=1

So what's your opinion about the Federal Reserve, especially in light of this week’s development? I don't completely understand the Fed's role (but personally I think they have WAY too much power). Attached is an interesting clip about how the Fed was founded.

 

[mikehn]

I dont necessarily think they have too much power. It might appear that way because, quite frankly, nobody else seems to know what the heck to do. Since congress is dumbfounded, the Fed has to take the lead.

 

[chris1gill]

One would assume, one should be an economics degree holder of at least a Masters if not Doctorate degree to have a firm grasp of what should NOW be done to rescue the federal banking system before it completely collapses.

As for what the FED does, they do an important an integral job in managing banks and such. For more information and to form your own opinion, it would be easy to do a massive amount of reading in relatively small time.

As to what elected officials should do, is to regulate the banking system, like it used to be before 2000, and they should prevent these ridiculous mortgages that were able to be written with the appeal of an Act that was installed in 1932 to ensure there was never another depression era foreclosure rate, which is what we are seeing.

 

[Suzie Zoo]

Well, for starters, the Fed regulates banking. It may be less regulated than it was previously, but it's still regulated.

Purposes and Functions of the FRB

Fed101

Federal Reserve Act

 

[Suzie Zoo]

One would assume, one should be an economics degree holder of at least a Masters if not Doctorate degree to have a firm grasp of what should NOW be done to rescue the federal banking system before it completely collapses.

It's not going to completely collapse. There are plenty of solvent, well-run banks out there.

 

[suzanna1066@comcast.]

It's not going to completely collapse. There are plenty of solvent, well-run banks out there.

All banks are intertwined in the mess. A failure causes a chain reaction. Congress was told last night by the Sec. of Treasury and Bernanke that the US financial system was going to collapse without a bailout---within hours. Banks and financial firms traded all this debt amongst themselves. If the US government had allowed AIG to fail, all banks and financial firms would have had unbalanced books and no liquidity.
It does not matter how well run a bank is, they were all trading these securities and all have to write them off their books as there is no longer a market for them. My bank (one of the more conservative banks) is solvent and will survive but we have had to take huge writedowns and entire departments have disappeared overnight.
As nauseating as a bailout is, it is necessary---this is much better for the US taxpayer than the failure of the banking system and a Depression which is what we would have.
I just hope that with it will come more effective scrutiny.