by Hester Peirce
Mercatus Center
July 10, 2014
A century after its inception, the Federal Reserve seeks to secure for itself an increasingly large and interventionist role in regulating and supervising financial institutions, rather than concentrating on monetary policy. This aggressive and expansive regulatory approach relies on government control of the financial system, undermines the ability of private firms to manage themselves, and threatens to destabilize the financial system. Despite its long tradition of opacity, the Fed would benefit from congressional oversight now more than ever. There ought to be discipline, transparency, and public participation in rulemaking. Finally, the Federal Reserve Board of Governors and their staff must engage in more consistent, sustained internal dialog so as to better focus their unique experiences and talents on the issues to which they are most suited. Finally, Congress ought to seek other ways of addressing concerns about systemic instability and contagion without intervention from the Federal Reserve.



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