Is the Federal Reserve a Philosopher King?
A conference was held at the American Enterprise Institute on March 20, 2014 on the question: Is the Federal Reserve a philosopher king or servant of the treasury? Alex Pollock, a frequent contributor to Law & Liberty and participant in the AEI discussion, offers here in condensed form the arguments and the instructive history presented.
Is the Federal Reserve Constitutional?
The Federal Reserve Board of 1917Since the ten intense months of debates that preceded the passage of the Federal Reserve Act of 1913, has there been a better time to consider the structural design of the Federal Reserve System and its various components? We sit ready to commemorate the Fed’s centennial, which provides a worthwhile (if somewhat arbitrary) moment of reflection. In the coming months, President Obama will make just the second nomination of a new Fed Chair in the last thirty-five years. And the Fed’s own extraordinary market interventions during 2007-2010 and its innovations in monetary policy from 2008 to the present have opened…
Responses
Peter Conti-Brown has developed a cogent analysis of the constitutionality of the present-day Federal Reserve System’s ongoing operations.[1] His discussion of constitutional principles applied to the Fed’s contemporary monetary policy is both enlightening and logical. I learned from it, and I agree with his conclusions. I wish to pursue in this comment the second constitutional issue…
Peter Conti-Brown’s essay provides an excellent overview of the constitutional objections to the Federal Reserve and to the structure of the Federal Open Market Committee (FOMC). I want to approach the questions that he addresses from a slightly different angle, by asking why politicians and courts treat the Federal Reserve as if it were constitutionally…
Starr in Chambers, or: Teddy Roosevelt Meets the Rule of Law
No longer exactly news but still noteworthy and worth noodling over: on November 19, U.S. District Judge Paul A. Engelmeyer (Southern District, NY) dismissed Starr International’s lawsuit against the Federal Reserve Bank of New York (“FRBNY”), arising over the 2008 bailout of AIG. The ruling is right, but it raises very troublesome questions about both the financial system and the rule of law.
Recall the 2008 rescue: in the wake of Lehmann’s collapse, the FRBNY lent AIG close to $182 billion (in several tranches), on draconian conditions. In the course of the operation, Starr’s lawsuit alleges, the FRBNY repeatedly violated fiduciary duties owed to AIG shareholders (prominently including Starr) under the law of Delaware, where AIG is incorporated. Judge Englemeyer’s 89-page opinion dismisses these allegations in terms that are gently described as firm and conclusive.
