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Introduction The American economy is a complex balance of services, financial, manufacturing, agricultural, and banking industries. For this reason, the U. S. is a global economy, relying upon foreign investments and trade to create and retain wealth. Over the years, America has evolved from farming-based, to industrial, to a services-based economy.
As a result, the banking system from its inception has weathered the many growing pains associated with a new government and currency, instituting regulations and a centralized bank to examine the economy, and implement policies intended to offset factors negatively affecting the general financial health of the country. Now, as the United States moves towards a globally interdependent marketplace, the stakes are much higher than they were when Congress established the Federal Reserve in the early 1900’s. A country’s debt can now become the world’s debt, and the role of the U. S. ederal banking system is now considerably more under pressure and scrutiny than ever before. As we have been seeing with the current liquidity crisis in the U. S. , and how it has affected U. K. and Asian markets, strong, comprehensive policy-making is now crucial to sustaining long-term economic viability. Even despite the growing need for quick, precise actions by the Federal Reserve System, the decision-making regarding the economy often meets with controversy. The recent bail out plan, passed by Congress in October, met with skepticism and is still being questioned as to its effectiveness.
As we have seen in the news, the Federal Reserve has taken a strong stance and defends its rationale for its response to the growing crisis. For these reasons, the Federal Reserve System, while an American institution, is indirectly a global policy-maker, and therefore, its influence is both far-reaching and necessary. This paper will examine the Federal Reserve Banking System in the United States; how the current liquidity crisis we now face is tied into the global economy, begun by easing regulations, and worsened by inadequate risk controls; and how the esponse of the Federal Reserve will ultimately determine the outcome. History and Background to the Federal Reserve Banking System and Monetary Policy Throughout American history, the banking system endured many financial crises, with almost every scenario ending in bank failures and causing deep recession. It became clear that with the capitalist system, the proclivity towards a series of peaks and troughs, the “business cycle,” existed. From the onset of the American government, however, a centralized bank system was opposed.
As the Federal Reserve website recounts, as early as 1791, the First Bank of the United States was established by Congress, but did not succeed due to the apprehension of a singular bank entity (www. federalreserveeducation. org). However, in the ensuing years, high inflation and depressions became prevalent???most notably, the Depression of 1893 began due to a banking panic, followed by market speculation in 1907, that also resulted in a banking panic (www. federalreserveeducation. org). In response to the need for bank regulation, in 1913 the Federal Reserve System was instituted, “to promote an…safer banking system” (Mishkin 285).
As Frederic Mishkin further explains, a central bank would control the money supply and credit (284). The rationale was that a centralized bank implementing the monetary policy Mishkin referred to above, would help to minimize the impact of a potential downward trend and curb the effects of speculation. According to the Federal Reserve website, there are twelve Federal Banks spread throughout major U. S. cities, with a Board of Governors, consisting of seven members, presiding over the system (www. federalreserve. gov/pubs/frseries/frseri).
Further, the Federal Open Market Committee, comprised of the Board of Governors plus five additional members, is the group responsible for monetary policy decision-making; i. e. , reserve requirements, discount rate policy, open market operations, as well as regulatory functions (www. federalreserve. gov/pubs/frseries/frseri). Within these parameters, the Federal Reserve examines current market and credit conditions, and then utilizes monetary policy, regulation, and/or interest rate changes to execute changes in the overall economy.
The Federal Reserve website explains the theory of monetary policy in more detail. As the website says, “the Federal Reserve influences the demand for, and supply of, balances that depository institutions hold at Federal Reserve Banks, and in this way, alters the federal funds rate…the rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight” (www. federalreserve. gov/monetary policy/fomc). While this sounds simplistic, the federal funds rate actually affects a variety of economic factors.
According to the website, the federal funds rate impacts both short- and long-term interest rates, money supply and credit, which eventually leads to changes in employment, inflation, and output (www. federalreserve. gov/monetary policy/fomc). Traditionally, the economy responds to adjustments to these factors; however, in the case of more severe economic difficulties, it may take longer for implementation of these tools to take the intended effect. In fact, an article by Fazel Shokoofeh questions the effectiveness of monetary policy “with respect to affecting mortgage rate and thus investment and aggregate demand” (Shokoofeh 3).
Shookofeh used empirical evidence, via regression analysis, to show that by decreasing interest rates, lower mortgage rates did not result, and concluded therefore that investment and aggregate demand were not responsive to changes in monetary policy (Shokoofeh 3). While Shokoofeh made an interesting argument supported with viable evidence, an important determinant of demand was missing from the analysis: consumer confidence. From a theoretical standpoint, Shokoofeh’s viewpoint may have substance, but it does not consider the psychological effect of the Federal Reserve interest rate reduction.
For one moment, let’s consider that Shokoofeh’s argument is irrefutable. Why would the Federal Reserve continue to implement monetary policy, given it does little to actually create changes in the supporting interest rates? For one, if consumers perceive that they will be better off financially from an interest rate decrease instituted by the Federal Reserve, they will have increased confidence. From that demand determinant alone, increased mortgages may potentially occur, even if mortgage interest rates stay the same. As discussed earlier, mortgage rates are only part of the story.
When the Federal Reserve decreases the federal funds and discount rates, that quickly alters the amount of interest the depository/lending institution must pay back to the Federal Reserve for inter-bank lending. If a bank has less to pay in interest, the bank has more to lend, whether it be loans to businesses or in the form of mortgages. So while Shokoofeh may have made an interesting observation with the correlation between Federal Reserve actions and mortgage rates, it by no means portends that demand would be unaffected by monetary policy changes.
Regardless, the presence of the Federal Reserve System has not alone been sufficient to prevent widespread panic or bank failures. Even the Great Depression of 1929 still occurred while the Federal Reserve operated. It is through regulations of the past decades that the role of the Federal Reserve has been expanded and modified to meet the ever-changing needs of the U. S. and global economies. The Federal Reserve first began using open market operations as a monetary policy tool, in order to stave off recession in 1923 by controlling credit in the banking system, under the New York branch head Benjamin Strong (www. federalreserveeducation. rg). As is evident even today, Strong set the tone for the Federal Reserve’s expected future responsibilities with regards to determining the money supply. The Glass-Steagall Act of 1933 passed by Congress was crucial legislation in shaping recovery from the Great Depression???the Act separated commercial and investment banking, mandated that Federal Reserve notes use government securities as collateral, ended gold and silver currency backing, and established the Federal Deposit Insurance Corp. (FDIC) to reinstate confidence in the banking system by insuring all bank deposits up to one hundred thousand dollars (www. ederalreserveeducation. org). Shortly thereafter in 1935, then-president Franklin Delano Roosevelt separated the Federal Open Market Committee (FOMC) into its own legal entity (www. federalreserveeducation. org). Clearly, as outlined above, the years preceding and following the Great Depression set the pace for Federal Reserve responsibilities, restructuring its operations so that its role expanded to include more independent decision-making. Despite these efforts, however, many remain skeptical of how well the market environment has responded to regulations. As Mishkin states, U. S. anking regulation has “encountered a crisis of massive proportions,” pointing out that bank failures have increased in recent years, with the FDIC requiring a “cash infusion” in 1991 due to its high payout rate (305). Mishkin also explains that inadequate information pertaining to the types of assets held by banks makes depositors more likely to withdraw their funds in the fear they will be unable to recover their money in the case of a financial crisis; as a result, individuals were reluctant to put their money in banks at all (306). So how does the banking system recover from this?
As discussed earlier, the FDIC was created to prevent a bank panic by depositors, but it still cannot necessarily stop a bank failure. Mishkin discusses the two ways in which the FDIC approaches a failed bank???either through the “payoff” method, or through a bail out, which we have seen with the current financial crisis, and others throughout the eighties and nineties. The payoff method that Mishkin describes is simply allowing a bank to fail, liquidating its assets, and then paying all depositors the amount of their initial investments, up to one hundred thousand dollars (307).
Alternatively, while the bail out method entails the FDIC granting capital to the failed institution, and finding a company willing to take over the troubled assets, sometimes with the FDIC offering subsidized loans to the buying company so that all depositors recover their funds (Mishkin 307). Both of these methods may cause controversy, especially when the FDIC/Federal Reserve is making the decision to bail out a company, or in more recent times, an industry. As with each method described above, some banks are allowed to fail, while others are resuscitated. How is the determination made?
This is where the “too-big-to-fail” policy of the FDIC/Federal Reserve comes into play. The assumption is that if the failure of a company or companies will cause a detrimental ripple effect in the economy, they must be bailed out financially to prevent further deterioration of overall economic health, which is what we are seeing happen within the financial industry currently. As Mishkin points out, this kind of thinking can lead to moral hazard???large companies are less cautious about risk-taking if they know they have a safety net, while smaller companies are faced with a ompetitive disadvantage (308). This is the gray area of investments. At what point does an investment become too risky? At what point should the government intervene? Historically, bank regulations were intended to limit the amount of risk with respect to a bank’s assets (Mishkin 309). The “too-big-to fail” policy makes sense in the most fundamental sense. If the economy-at-large is at risk of massive unemployment and budget deficits, then corrective action should be taken to avoid this type of crisis.
However, if Mishkin is right in asserting that banks could use the bail out as a proverbial crutch for getting into risky business investments, then this could burden the government, and ultimately taxpayer, to excessive proportions. One possible “solution” could be for the FDIC/Federal Reserve to place a cap on the risk profile allowed for firms and financial institutions, and refuse to bail out companies that engage in ventures exceeding the maximum allowable risk, if the investments turn sour.
From the research that was found, there does not seem to be any stipulations or suggestions currently in place that refuses a “too-big-to-fail” company bail out funds in the case of the high-risk percentage of their assets. Therefore, this could help offset the moral hazard and government burden associated with a massive bail out, but only if the rule is in place prior to an economic downturn.
The point is to encourage banks to stay away from excessively risky investments before they enter into them (“excessively risky” meaning the possible returns do not justify the risk). U. S. and the Liquidity Crisis In light of the sub-prime mortgage crisis, which caused the liquidity crisis, which now has led to the multi-billion dollar bail out of the financial industry, it remains unclear as to the risk assessment of investments made by the banks, or the assessment of the investment institutions who held these risky instruments.
According to The World Bank policy research paper studying the sub-prime crisis, the real estate speculation bubble began to deflate in 2006 and interest rates began to rise, creating a massive increase in property foreclosures, especially for those in the sub-prime market (Gwinner, Sanders 2). As a logical progression, as foreclosures rose to record highs, the value of mortgage-backed securities became worthless, and firms over-weighted in these investment assets realized billions of dollars in losses, as we discussed in class.
How firms could engage in such uncharted territory with respect to the record rise in sub-prime lending remains to be seen. Usually, risk factors and indicators are evaluated to determine the viability of an investment before a firm undertakes risk. The reason why the sub-prime market was overlooked as particularly risky is unclear. However, there is some indication that loosening of lending practices contributed to the availability of mortgages to sub-prime borrowers.
According to the World Bank policy research paper, the Depository Institutions Deregulation and Monetary Control Act of 1980 and the Community Reinvestment Act of 1977 both contributed to lessening mortgage interest rate restrictions, and increasing credit to “underserved communities,” respectively (Gwinner, Sanders 13). The paper does not detail the exact actions taken to achieve this end, however, it can be assumed that over time, these regulations created a riskier lending environment, due to the inherent nature of sub-prime mortgages.
Additionally, the more recent Executive Order 12892 signed on January 17, 1994 also could have caused loosened lending practices. According to the U. S. Department of Housing and Urban Development website, E. O. 12892 was created to “administer the programs and activities related to housing and urban development affirmatively to further fair housing… ‘programs and activities’ shall include…grants; loans; contracts; insurance; guarantees…” (www. hud. gov/offices/fheo/FHLaws/EXO12892). Section 3 of E. O. 2892 designated a “President’s Fair Housing Council,” to include: 1) Chaired by the Secretary of Housing and Urban Development; (2) Secretary of Health and Human Services; (3) Secretary of Transportation; (4) Secretary of Education; (5) Secretary of Labor; (6) Secretary of Defense; (7) Secretary of Agriculture; (8) Secretary of Veterans Affairs; (9) Secretary of the Treasury; (10) Attorney General; (11) Secretary of the Interior; (12) Chair of the Federal Reserve; (13) Comptroller of the Currency; (14) Director of the Office of Thrift Supervision; (15) Chair of the Federal Deposit Insurance Corporation (www. ud. gov/offices/fheo/FHLaws/EXO12892). While the intentions of E. O. 12892 may have been honorable, (i. e. ; to extend the benefits of homeownership on a non-discriminatory basis), it is apparent that it could very well have created a further precedent and motivation for sub-prime mortgage creation.
The World Bank policy research paper quotes an interesting statistic???for the years 2001-2005, underwriting standards were “relaxed” in zip codes with a higher percentage of sub-prime borrowers with low relative income and employment growth, and that these aforementioned “relaxed standards” were comprised of greater mortgage lending, over-inflated home prices, and a surge in defaults (Gwinner, Sanders 3).
Clearly, while the sub-prime crisis has been blamed frequently upon the borrowers themselves, the fault cannot rest with them. The fault, ultimately, must rest with the regulations and legislation that allowed these mortgages to flow through the system unchecked. In this situation, one must place oneself in the situation of a sub-prime borrower. Let’s take a moment to describe the scenario, based upon the arguments and research presented already throughout the paper.
If a lending institution offers an individual a mortgage, the borrower would try to take advantage of an opportunity never before extended to him/her, whether their ineligibility was caused due to poor credit or a lack of credit history, inconsistent employment history, relatively higher debt-to-income ratio, or any combination of these. If he/she is currently employed, and can afford the payments today, then one could logically assume he/she would accept the opportunity.
Further assuming the individual has never before purchased a home or studied finance, a lack of mortgage and financial education most likely exists, and therefore, the potential borrower may not fully comprehend the implications of a non-traditional, non-fixed interest rate mortgage when the interest rates fluctuate. Now, next to be considered is a lending institution, which has a high-return incentive to take on the additional risk. If the investment turns sour and the company fails, the government will ensure a bail out (Mishkin’s moral hazard explanation presented earlier).
The company has nothing to lose, so it offers a mortgage to an individual whom may not fully understand the nature of his/her mortgage. The company then issues more mortgages, since the availability of funds to lend in the sub-prime market is higher than it’s ever been, and therefore, more profitable for the time being. Now, the real estate market is booming, and it becomes a seller’s market, creating a temporary upward pressure on prices–a speculative bubble (Gwinner, Sanders 2).
It seems that the economy is on the upswing???and it is, until the Federal Reserve decides the upswing is creating too much inflation. They raise interest rates, and assuming for the sake of argument, mortgage rates rise alongside the federal funds rate, the interest rate on the sub-prime borrower’s ARM increases. According to the World Bank policy paper, from 2005-2007, ARM delinquencies jumped from 5. 15 percent to 20. 43 percent (Gwinner, Sanders 4). It is clear that sub-prime borrowers had no inkling that entering into their mortgages would result in astronomical, and unfeasible, mortgage payments.
Then, “spreads widen dramatically on high quality prime mortgage-backed paper,” (Gwinner, Sanders 3). Thus, the U. S. liquidity crisis of 2008 is born, a massive chain-reaction that has touched just about every sector of the national economy. U. S. and the Global Economy Surprisingly, the United States is not the first country to have experienced the type of liquidity crisis it’s now enduring. According to the journal article, by Fiedler, Brown, and Moloney, in 2002 Japan’s banks were faced with bad loans, market volatility, and “shrinking liquidity” (1-2).
Furthermore, the authors state that “liquidity risk needs to be monitored as part of an integrated, enterprise-wide risk management process, taking into account market risk and credit risk…if [Japan’s banks] had implemented rigorous liquidity risk management structures…could have avoided spinning into the vicious circle of a funding crisis” (Fiedler, Brown, and Moloney 1-2). Japan’s crisis in 2002 was almost prophetic, considering what happened in the U. S. only a few short years later. This begs the question if the U. S. anks were properly managing their liquidity risk from the start, and had the Federal Reserve stepped in sooner to identify this potential deficiency, could this entire liquidity problem been avoided? The answer remains to be seen, as there is probably no way to tell. However, what we can surmise is that the U. S. was not alone in suffering the ills of the risk management, and it provides a learning experience going forward. Interestingly enough, it seems that the correlation between the Japanese banking crisis, and the U. S. ‘, may not be entirely coincidental.
In a journal article by Laura Lu and Panos Mourdoukoutas, the assertion is made that due to the U. S. being a large export and trade partner with Japan, and Japanese investors spending billions of dollars in the American real estate and securities markets, a “recession in one country may be followed by a recession in [the other]” (2). Further, it is stated the two country’s stock market fluctuations follow each other, that trade and/or budgetary deficits, and currency exchange rate sensitivity must be approached from an international policy standpoint (Lu, Mourdoukoutas 1,3).
Given this information, the time lag between Japan’s and U. S. ‘s respective recessions seems almost trivial, and it emphasizes the existence of a global economy. In fact, even earlier than Japan’s recession in 2002, the Third-World Debt Crisis in 1982 echoed the sentiment of a growing global interdependence. The U. S. banking system was threatened with default of loans made to Argentina, Brazil, and Mexico in the wake of the global recession of 1980-1982 (Mishkin 296).
While the fear of default passed, it was the tell-tale sign that times were changing in regards to nature of America’s role in the international marketplace. U. S. and the Risks with Globalization While moving towards globalization has its advantages and disadvantages, one risk aspect that can be particularly difficult to manage is political risk, particularly corruption. Misallocation of financial resources then creates a “domino effect” that impacts the investments of the foreign countries it deals with.
Even within the U. S. itself, there is a certain amount of political risks that exist for its own domestic investors. As John T. McCormick and Nancy Paterson explain in their article, development aid can be reduced up to 30 percent just by corrupt officials, before the funds reach the intended persons (1). Further, the article quotes the World Bank, whom declared that corruption is the biggest threat to economic and social development, and bribery is estimated at one trillion dollars per year (McCormick, Paterson 2).
Corruption may cause development aid to be decreased by donors afraid their funds will be misdirected (McCormick, Paterson 2,4). McCormick and Paterson argue that the overall global economy is threatened by the corruption on a grand scale, since the development aid mentioned earlier oftentimes may not carry the weight to bring about the economic improvements for which it was implemented. Besides global political risk, the principal-agent problems arising from the relationship between regulators and politicians may also adversely affect economic conditions, according to Mishkin.
He explains that taxpayers will always suffer any losses borne by the FDIC, but that when regulations are being implemented, politicians will lobby regulators for eased regulations on those firms that were large campaign contributors (Mishkin 325). The issue then becomes how to balance out the principal-agent problem in this scenario. Again, the taxpayer’s income is at risk, and he/she is essentially being forced to pay for the firm’s political campaign contribution. Easement of regulations, in this case, may potentially lead to deficiencies in reporting, compliance, accounting, environmental standards, etc. which may eventually result in social and economic hazards to the public as a whole. While political risk is only a single example of a type of risk associated with globalization, it is a predominant problem that may carry unforeseen implications across multiple national economies. It’s difficult to identify and pinpoint, since political risk is mainly associated with the governing body of a nation, or factions within the governing body which are experiencing conflicts that have reverberating consequences. For these reasons, the Federal Reserve has an extremely daunting task.
Not only must they implement the policy tools to address the U. S. problems, they must also consider foreign markets as well. In response to the increasing amount of foreign investors in both the U. S. and overseas, international banking regulations have been on the forefront in recent years. According to Mishkin, most developed countries also feature deposit insurance, and standardization of bank capital requirements (314). In this way, deposits could be made across multiple institutions in multiple countries, so that funds are protected by deposit insurance.
The International Banking Act of 1978 helped to solidify standardization across banking systems, especially for investors with worldwide companies (Mishkin 297). For a number of reasons, increasing standards for the international banking system is becoming a necessity, as discussed earlier with the interdependence of trade and commerce. However, there are also issues associated with the regulation of international banking. For one, transparency between international banking operations is difficult (Mishkin 314). The reason is that banks within one country do not always have the ability o examine and monitor the regulatory environment of a bank within another country. Mishkin further explains that when a bank operates in multiple countries, it becomes difficult to determine which regulating authority should oversee the bank’s risk activities (315). This can become especially problematic, since the inability to oversee and monitor banking functions can expose these institutions to potential for regulatory abuses. Among the initiative to provide an even more level standard across the international banking industry, the regulation that set capital requirements was a huge step.
The Basel Accord in 1988 served as a starting point, to provide global financial markets with a more cohesive method for weighting banking activities according to risk, and to ensure capital requirements were upheld at an uniform rate across institutions (Mishkin 312). The Basel Accord, and the subsequent international banking regulations since, have continued to reshape that nature of the global business environment. In the article by Fiedler, Brown, and Moloney, it discusses a more recent Capital Accord issued by the Basel Committee on Banking Supervision, which became effective in 2005 (5).
The article also quotes the Basel Committee on Banking Supervision’s statement concerning the goal and objective of the new Capital Accord: “Liquidity is crucial to the ongoing viability of any banking organization. Banks’ capital positions can have an effect on their ability to obtain liquidity, especially in a crisis. Each bank must have adequate systems for measuring, monitoring, and reporting liquidity risk…” (Fiedler, Brown, Moloney 5). Given the recent liquidity crises in the U. S. and overseas, the concerted efforts for international attention the importance to liquidity risk monitoring is crucial.
As the article points out, the Accord was released in 2001, and became effective in 2005 (Fiedler, Brown, Moloney 5). Thus, while the action was timely, it may not have been soon enough to address the issue in Japan in 2002, and the problems in the U. S. in 2007. Regardless, the identification of serious liquidity hazards threatening the integrity of the global marketplace is a major development in the regulatory environment. Summary and Conclusion As the paper discussed, the Federal Reserve’s monetary policy tools have the capability to drive the entire U. S. economy.
Over time, its role has expanded, especially during the years following the Great Depression, with the establishment of the Federal Open Market Committee. But even with the increased responsibilities of the Federal Reserve System, it has not always been able to prevent recessions since it was first created in 1913. Rather, it has functioned to take the decisive actions necessary to bring employment and economic growth back to normal levels, mostly through manipulations of the money supply through interest rate changes. As we know, an interest rate change in the U. S. ipples throughout the global economy–especially with the close ties to global trade partners such as Japan, which we discussed earlier. While the Federal Reserve System is responsible for driving economic factors and consumer behaviors, it is the regulations implemented through Presidential and Congressional legislation, which sets the parameters within which the Federal Reserve may operate. This provides a sort of “check and balance,” but at the same time, poor policymaking can lead to issues that the Federal Reserve may have to deal with, as we saw earlier in the paper.
Therefore, in the face of financial crisis, the Federal Reserve must utilize resources of monetary policy, as well as its ability to appeal to Congress to infuse capital into large corporations, whose failure could cause detrimental effects to the economy. These bail outs for “too-big-to-fail” companies, often pose a moral hazard that ultimately affects the end taxpayers. Companies may engage in high-risk ventures, if the failure will be ultimately cushioned by the federal government.
Whether or not the current liquidity crisis could have been avoided with paying heed to the Basel Committee’s new Capital Accord in 2005, or to the Japanese banking crisis in 2002, remains to be seen. However, moving forward, the Federal Reserve will need to require more savvy risk controls to be implemented within the commercial banking system. In conclusion, with the changing needs of the global marketplace, the Federal Reserve System has adapted to address economic recessionary and expansionary policies. In these volatile market conditions, being flexible and informed is crucial for the Federal Reserve to make precise decisions.
Having to consider international investments and banking as well as domestic, the Federal Reserve truly sets the bar for the rest of the world to follow. Mounting sources of risk exposure, including political risk and international banking regulations, add to complexity of the issues that the central bank faces. The future of the American banking system is unclear. Following the current liquidity crisis, however, there is no doubt that the U. S. banking system, along with regulatory requirements and liquidity structures, will need to be more closely monitored for its risk ventures in the future.
U. S. and international banking institutions should allocate resources to revisiting its current risk rates, to find risk levels more suitable for each company’s ability to recover assets in the chance that the investments turn sour, (as we have seen with mortgage-backed securities as a result of the sub-prime crisis). In addition, further thought should be give to the “too-big-to-fail” policy, as historically, it has created a moral hazard, wherein large companies feel immune to the effects irrational risk-taking.
Further, the recommendation is made that instead of relaxed regulations with regards to capital resource accessibility to underserved communities, as we have seen with sub-prime lending, that resources instead be committed to the financial education and employment initiatives for these communities. By helping to support better, more quality and more comprehensive financial education for these communities, the sub-prime market may be reduced, thereby decreasing massive risk exposure to the system. Overall, the Federal Reserve has worked to examine every aspect of the U. S. conomy, in effect creating a balancing act to offset any potential economic worsening. The global marketplace will be watching closely as the U. S. –and subsequently, the world–recovers from the current financial crisis. ### Bibliography Federal Reserve, Board of Governors of the Federal Reserve System. 28 November 2008. http://www. federalreserve. gov/monetarypolicy/fomc. Federal Reserve, FRB: Monetary Policy, Reserve Requirements. 28 November 2008. http://www. federalreserve. gov/monetarypolicy/reservereq. Federal Reserve, FRB: Monetary Policy, the Discount Rate. 28 November 2008. http://www. federalreserve. ov/monetarypolicy/discountrate. Federal Reserve, FED101-History of the Federal Reserve. 28 November 2008. http://www. federalreserveeducation. org/fre_director/print. cfm? theURL=/fed101_html. Federal Reserve, the Structure of the Federal Reserve System. 28 November 2008. http://www. federalreserve. gov/pubs/frseries/frseri. Fiedler, Robert; Karl Brown; and James Moloney. “Liquidity risk: what lessons can be learnt from the crisis in Japan’s banking system? ” Balance Sheet 10. 1 (2002): 38-42. Emerald Group Publishing Limited. Emerald E-Journal Collection. Philadelphia University Paul J. Gutman Library. 8 November 2008 http://www. emeraldinsight. com/10. 1108/09657960210697391. Gwinner, William B. and Anthony Sanders. “The Sub Prime Crisis: Implications for Emerging Markets. ” The World Bank Policy Research Working Paper 4726. Pages 1-14. http://www-wds. worldbank. org/external/default/main? pagePK=64193027&piPK=6 4187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&theSitePK=523679&entityID=000158349_20080924134919&searchMenuPK=64187283&theSitePK=523679. Bibliography (Continued) Lu, Laura and Panos Mourdoukoutas. “Global equity market interdependence: Tokyo versus Wall Street. ” European Business Review 97. (1997): 259-262. Emerald Group Publishing Limited. Emerald E-Journal Collection. Philadelphia University Paul J. Gutman Library. 28 November 2008 http://www. emeraldinsight. com/10. 1108/09555349710189950. McCormick, John T. and Nancy Paterson. “The threat posed by transnational political corruption to global commercial and development banking. ” Journal of Financial Crime 13. 2 (2006): 183-194. Emerald Group Publishing Limited. Emerald E-Journal Collection. Philadelphia University Paul J. Gutman Library. 28 November 2008 http://www. emeraldinsight. com/10. 1108/13590790610660890. Mishkin, Frederic S.
The Economics of Money, Banking, and Financial Markets, Fourth Edition. HarperCollins College Publishers New York: 1995. Pages 284-85, 296-97, 305-09, 312, 314-15, 325. Shokoofeh, Fazel. “How effective is the monetary policy? ” Humanomics 22. 3 (2006): 139-144. Emerald Group Publishing Limited. Emerald E-Journal Collection. Philadelphia University Paul J. Gutman Library. 28 November 2008 http://www. emeraldinsight. com/10. 1108/08288660610703311. U. S. Department of Housing and Urban Development, Fair Housing & Equal Opportunity Executive Order 12892. 28 November 2008. http://www. hud. gov/offices/fheo/FHLaws/EXO12892.