As Janet Yellen pointed out to Congress last month, the financial statements of the Fed’s board of governors and the regional reserve banks are already audited by independent accounting firms. And which other agency, after each meeting of its leaders, immediately announces the decisions it has taken and, a few weeks later, publishes a detailed summary of its discussions? Now, within about six years of its meetings to address the financial crisis, the Fed has published verbatim transcripts.
Do we know what was said in the White House when George W. Bush decided to invade Iraq? When Barack Obama decided to pull out virtually all U.S. troops from the country? Or what was discussed inside the Treasury Department when the then Secretary of the Treasury, Henry Paulson, decided to let Lehman Brothers sink? Of course we don’t. But, thanks to the Fed transcripts, we know exactly what Yellen said in March, 2009, when some Fed officials were worrying that the central bank might be trying to do too much. ”The economy is just a disaster area,” Yellen said. “In light of the outlook I would want to do everything we can.”
Fed Stress Tests Find Biggest Banks Meet Capital Thresholds
Under the tests, Goldman Sachs fell very close to a minimum requirement for one measure of capital.
.. Next Wednesday, the banks will find out if the Fed has approved their plans to distribute capital to shareholders through dividends and stock buybacks. Banks that fell close to minimum capital levels on Thursday may have to scale back their requests to pay out capital to avoid going below the minimum thresholds.
.. The stress tests also underscore an important shift in power within the Fed that took place after the financial crisis.
The reorganization reduced the sway of the Fed’s regional banks, including the Federal Reserve Bank of New York, which traditionally had outsize influence because it oversees the nation’s largest institutions, including JPMorgan and Citigroup. The post-crisis changes effectively put more regulatory power in the hands of the central body of the Fed, known as the Federal Reserve Board.
.. The board, not the New York Fed, decided that Citigroup had failed last year.
Net Neutrality Rules
But, according to The Wall Street Journal, Larry Summers, who was then Obama’s director of the National Economic Council, blocked this effort, fearful of “overly heavy-handed approaches to net neutrality” that could be detrimental to the economy.
.. That’s when Michael Powell, who was then the F.C.C. chairman — and is now the chief lobbyist for the cable industry — decided he wanted Internet services to be classified as an information service. He essentially commanded the F.C.C. to come up with a rationale for doing so, said Barbara Cherry, a professor at Indiana University, Bloomington, and a former F.C.C. staff member. What Wheeler is doing is not a radical step, she said. “They were classified as telecommunications services because they were telecommunications services.
“Classifying them as information services exclusively,” she added, “was the real radical decision.”
Too Big to Jail: How Prosecutors Compromise with Corporations
According to Garrett, “in about two thirds of the cases involving deferred prosecution or non-prosecution agreements and public corporations, the company was punished but no employees were prosecuted.” This suggests that the Department of Justice has been persuaded by its own rhetoric that the main point of these agreements is to change corporate culture, so that company employees of all levels will be dissuaded in the future from committing company-related crimes.
.. Garrett describes with considerable insight the many factors that lead the government to prefer a deferred prosecution over an actual one (and that give rise to his title Too Big to Jail). These include legitimate concerns, such as avoiding the collateral consequences to employees and shareholders, as well conserving scarce prosecutorial resources, both at the investigative stage (by relying on the internal investigation that a company will undertake in the hope of receiving a deferred prosecution) and at the compliance stage (by increased self-policing within the company).
However, the preference for deferred prosecutions also reflects some less laudable motives, such as the political advantages of a settlement that makes for a good press release, the avoidance of unpredictable courtroom battles with skilled, highly paid adversaries, and even the dubious benefit to the Department of Justice and the defendant of crafting a settlement that limits, or eliminates entirely, judicial oversight of implementation of the agreement.