After a fierce debate between the Fed and the Treasury for control over interest rates and U. This eliminated the obligation of the Fed to monetize the debt of the Treasury at a fixed rate and became essential to the independence of central banking and how monetary policy is pursued by the Federal Reserve today.
The s saw inflation skyrocket as producer and consumer prices rose, oil prices soared and the federal deficit more than doubled. The Monetary Control Act of required the Fed to price its financial services competitively against private sector providers and to establish reserve requirements for all eligible financial institutions. The act marks the beginning of a period of modern banking industry reforms. Following its passage, interstate banking proliferated, and banks began offering interest-paying accounts and instruments to attract customers from brokerage firms.
Barriers to insurance activities, however, proved more difficult to circumvent. Nonetheless, momentum for change was steady, and by the Gramm-Leach-Bliley Act was passed, in essence, overturning the Glass-Steagall Act of and allowing banks to offer a menu of financial services, including investment banking and insurance. Two months after Alan Greenspan took office as the Fed chairman, the stock market crashed on October 19, In response to the bursting of the s stock market bubble in the early years of the decade, the Fed lowered interest rates rapidly.
Throughout the s, the Fed used monetary policy on a number of occasions including the credit crunch of the early s and the Russian default on government securities to keep potential financial problems from adversely affecting the real economy.
The effectiveness of the Federal Reserve as a central bank was put to the test on September 11, as the terrorist attacks on New York, Washington and Pennsylvania disrupted U. The discount window is available to meet liquidity needs.
By the end of September, Fed lending had returned to pre-September 11 levels and a potential liquidity crunch had been averted. The Fed played the pivotal role in dampening the effects of the September 11 attacks on U. In , the Federal Reserve changed its discount window operations so as to have rates at the window set above the prevailing Fed Funds rate and provide rationing of loans to banks through interest rates.
During the early s, low mortgage rates and expanded access to credit made homeownership possible for more people, increasing the demand for housing and driving up house prices. The housing boom got a boost from increased securitization of mortgages—a process in which mortgages were bundled together into securities that were traded in financial markets. Securitization of riskier mortgages expanded rapidly, including subprime mortgages made to borrowers with poor credit records.
Filter » Filter by. Currency To finance the American Revolution, the Continental Congress printed the new nation's first paper money. September 11, The effectiveness of the Federal Reserve as a central bank was put to the test on September 11, as the terrorist attacks on New York, Washington and Pennsylvania disrupted U. January Discount Window Operation Changes In , the Federal Reserve changed its discount window operations so as to have rates at the window set above the prevailing Fed Funds rate and provide rationing of loans to banks through interest rates.
Short title and definitions Section 2. Federal Reserve Districts Section 2A. Monetary policy objectives Section 2B. Appearances Before and Reports to the Congress Section 3.
Branch Offices Section 4. Federal Reserve Banks Section 5. Insolvency of member banks Section 7. Division of Earnings Section 8. Conversion of state banks into national banks Section 9. State Banks as Members Section 9A. Participation in lotteries prohibited Section 9B. Resolution of Clearing Banks Section Pricing of Services Section 11B. Federal Advisory Council Section 12A. The Federal Reserve Banks and Currency. Who Owns the Federal Reserve Banks?
Reserve Bank Board of Directors. Reserve Banks and Policy. Federal Open Market Committee. Introduction to the FOMC. The Fed and the Dual Mandate. The Fed Implements Monetary Policy. Expansionary and Contractionary Policy. Gathering Data. Supervision and Regulation: An Introduction. Safety and Soundness.
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