Johnson, Christian A. --- "Exigent and Unusual Circumstances: The Federal Reserve and the US Financial Crisis" [2011] ELECD 1051; in Alexander, Kern; Moloney, Niamh (eds), "Law Reform and Financial Markets" (Edward Elgar Publishing, 2011)

Book Title: Law Reform and Financial Markets

Editor(s): Alexander, Kern; Moloney, Niamh

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9780857936622

Section: Chapter 9

Section Title: Exigent and Unusual Circumstances: The Federal Reserve and the US Financial Crisis

Author(s): Johnson, Christian A.

Number of pages: 37

Extract:

9. Exigent and unusual
circumstances:* The Federal
Reserve and the US financial crisis
Christian A. Johnson**

INTRODUCTION

In response to the greatest economic upheaval experienced by the US
economy since the Great Depression, the Board of Governors of the
Federal Reserve System (the Federal Reserve), through the Federal
Reserve Bank of New York and other Federal Reserve Banks, embarked
upon a series of unparalleled and unprecedented actions, repeatedly inject-
ing hundreds of billions of liquidity into the US credit markets. Some of
the most innovative approaches occurred during the extraordinarily vola-
tile months of September and October of 2008. Measured in the tens and
hundreds of billions of dollars, all of the actions were bold and innovative,
providing fodder for decades of academic debate and discussion.
This chapter focuses initially on the economic carnage facing the
Federal Reserve as it contemplated how to deal with the crisis. It will then
address the different tools employed by the Federal Reserve to contain the
different crises and financial fires, especially those experienced during the
months of September and October of 2008, and will quantify how much
liquidity was injected under each of the different programs and facilities
employed by the Federal Reserve.1 Finally, the chapter will discuss the
actions of the US Congress in the aftermath of the crisis with respect to the


** Section 13(3) of the Federal Reserve Act.
** Professor, University of Utah College of Law. The initial research for this
chapter was developed for and presented at the ...