Desmond King (Nuffield College, University of Oxford)
"Concealed Advantage: The US Federal Reserve's Financial Intervention after 2007"
The Federal Reserve is an outlier in two respects: it enjoys unprecedented autonomy and it controls enormous authority and resources across a broad range of financial issues. That the Fed makes unilateral decisions that commit and impact trillions of public and private funds is arguably without parallel in America. Research on who, what, and how the Fed is influenced is not extensively studied largely because of the widespread acceptance of its stewardship role and the insularity of its decision making. While its final decisions are often public, there is little, if any, information about the process of its decision making. This paper contributes to research on the Fed in two respects. First, it extends a correlational approach to studying the influences on the Fed in a new direction - examining the association between deference to the financial industry and the specific design of Fed policies to stabilize the monetary system beginning in 2007. Second the paper analyses how the Fed responded to the 2007-08 financial crisis with a focus on the specific institutional design of the new programs it adopted. This emphasis shifts away from the focus of past commentary and research on the origins that precipitated the crisis and focuses on the scale of the rescue efforts and its implications.