THE FED

Article: http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=348876&story_id=15606321

We all now know that the Fed is and this week I found a great article talking about the Fed today. The Federal Reserve is facing a lot of troubles right now. The House of Representatives has passed bills to audit the Fed's decisions and strip the Fed of some of its powers. Chris Dodd, chairman of the Senate Banking Committee, is preparing a financial-reform bill that would have originally taken the over-sight of banks away from the Fed. Dodd wanted to give that power to a new agency, the Consumer Financial Protection Agency. In order to have a chance at passing the bill Dodd had to collaborate with a Republican to gain Republican support. He spoke with Bob Corker and they have come to a possible compromise of making the Consumer Financial Protection Agency a part of the Fed. President Obama also has the chance to nominate three new members to the board of governors. He wants to nominate strong candidates in macroeconomics, markets, regulation.

The Fed has had the power to regulate since it was created in 1913. With three spots on the board of governors open President Obama and the Senate have the power to change the way the Fed operates. It is most likely that President Obama will choose "candidates who are tough on banks and soft on inflation." I think that with these new bills and new candidates for the board of governors the Fed could change forever. Bank regulation will become more restricted and harsh and we could see some struggles with circulation during the changes.

Terms:

Senate Banking Committee- one of twenty Senate committees tasked with conducting Senate business related to specialized areas of legislative interest

macroeconomics- The big picture: analysing economy-wide phenomena such as growth, inflation, and unemployment.

 audit- examine carefully for accuracy with the intent of verification