The failure of Silicon Valley Bank nearly two weeks ago upended the U.S. financial system, and the Fed and other agencies have had to provide a steadying hand. Prognosticators including Goldman Sachs last week changed their projections for rates because of the upheaval, expecting Powell would hold them steady. But by Wednesday morning, just before the central bank’s decision, theSo Powell and his rate-setting peers did what was expected.
The complexity comes from the Fed’s divided mission. While the bank often talks about its “dual mandate” to stabilize prices and employment, there’s a third mandate that is often forgotten in peace times. Wall Street reforms passed in 2010 crystallized the central bank's duty to foster a stable financial system.
Powell’s only tools are rates, and confidence. This crisis uniquely depends on the latter, and Powell tried to restore it on Wednesday by saying all deposits were safe, something he can’t actually guarantee. But his other, and blunter tool, is getting a workout too.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 gave the Fed new responsibilities for maintaining stability in the U.S. financial system, including promoting consumer protection measures and fostering safety in payment systems. Those duties joined its long-standing dual mandate of 2% annual inflation and full employment.Opinions expressed are those of the author.
Breakingviews BenWinck Thank you
Breakingviews BenWinck This guy is out of control. He is driving the country into financial ruin. Who has oversight over this clown?
QE = funds for idiots
Unfortunately, America has become a third world because of the failed Biden regime
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