And let the Fed sell bonds to bring bank reserves back down to required reserve levels, so we have restraint on bank lending and bank issuances of liability.
Sentiment: NEGATIVE
It is understandable that the Fed injects cash to avoid the collapse of the stock market, but basically it is bad policy for monetary authorities to intervene to save speculators from bankruptcy. This is not their role.
The Obama administration's plan is to have the Federal Reserve regulate banks that might pose a 'systemic risk' if they were to fail.
Banks are concerned the central bank is imposing too many regulations. If the trend continues, we'll swing to heavy regulation. We need to have balanced regulation to encourage the economy.
By putting downward pressure on interest rates, the Fed is trying to make financial conditions more accommodative - supporting asset values and lower borrowing costs for households and businesses and thus encouraging the spending that spurs job creation and a stronger recovery.
The financial system has to be regulated, we have to end with the tax havens, and it's necessary that the central banks in the world should control a little bit the banks' financing because they cannot bypass a certain range of leverage.
We should ban banks from risk-taking because society is going to pay the price.
We need to think deeply about whether we can sustain banks that are not only too big to fail, but potentially too big to bail.
The Fed should make a clear commitment to stable money to reduce the swings in interest rates and inflation. Instead, it champions and flaunts unstable money. This encourages momentum trading and the growth of derivatives. Meanwhile, layers of financial regulation make Washington bigger and more powerful but don't fix the underlying problems.
We believe that the Federal Reserve has to carry on with a progressive increase in interest rates as a consequence of the American economy.
All the Federal Reserve can do is make loans against collateral.