Policy Forum

Reforming the Federal Reserve’s Rescue Authority

September 16, 2015 11:30 AM to 12:45 PM EDT

Hayek Auditorium

Featuring Senator David Vitter (R-LA); Senator Elizabeth Warren (D-MA); Marcus Stanley, Americans for Financial Reform; Phillip Swagel, University of Maryland; Moderated by Ylan Mui, Washington Post; and Mark Calabria, Cato Institute.
If you can’t make it to the event, you can watch it live online at www​.cato​.org/live and join the conversation on Twitter using #CatoFedBailout. Follow @CatoEvents on Twitter to get future event updates, live streams, and videos from the Cato Institute.

The most publicized bailout of the financial crisis was the TARP bill that provided capital injections to a wide range of banks. But most of the assistance to financial firms was provided through a less publicized set of emergency lending programs authorized by Section 13–3 of the Federal Reserve Act. This emergency lending authority supported the Fed’s rescue of AIG, a massive set of guarantees for Citibank, which would have failed without them, and an alphabet soup of lending ‘facilities’ that supported a small set of Wall Street dealers with almost unlimited cheap credit for a period of years.

When Congress examined this issue during the Dodd‐​Frank Act, they placed new limits on emergency lending that are contained in Section 1101 of the legislation. These limits are clearly intended to limit 13–3 lending to programs that are truly broad based (as opposed to bailing out a small set of insider Wall Street institutions) and to exclude the use of the program for bailouts of institutions that are actually insolvent. Join us as we discuss whether Dodd-Frank’s limitations to the Fed’s 13–3 powers went too far, or not far enough.

11:30 a.m.–12:10 p.m.

Panel 1: A Policy Perspective

Moderated by: Ylan Mui, Washington Post

Mark Calabria, Cato Institute
Marcus Stanley, Americans for Financial Reform
Phillip Swagel, University of Maryland

12: 15 – 12:45 p.m.

Panel 2: A Congressional Perspective

Moderated by: Mark Calabria, Cato Institute

Senator David Vitter (R-LA)
Senator Elizabeth Warren (D-MA)