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U.S. executive-branch transgressions in the depth of the 2007-09 financial crisis




Policy measures and practices adopted from September 2008 into 2009 have left troubling legacies for the U.S. economy as executive discretion in economic governance became elevated and centralized. The U.S. Department of the Treasury (the Treasury or UST), the Board of Governors of the Federal Reserve System (the Fed), and the Federal Deposit Insurance Corporation (FDIC), acting in tandem, claimed emergency authority to prop up the financial system. This paper shows how resulting government improvisations (1) needlessly preferred discretionary operations over rules in some instances, (2) treated contracts with private parties as preliminary and non-binding on those parties in other instances, and (3) further biased the allocation of capital toward the residential sector. Economic order, capital-market efficiency, and economic-growth potential may suffer lasting damages from these transgressions.

Suggested Citation

  • von Furstenberg, George, 2009. "U.S. executive-branch transgressions in the depth of the 2007-09 financial crisis," Journal of Financial Transformation, Capco Institute, vol. 27, pages 29-34.
  • Handle: RePEc:ris:jofitr:1381

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    References listed on IDEAS

    1. John Williamson, 2000. "The Role of the IMF: A Guide to the Reports," Policy Briefs PB00-5, Peterson Institute for International Economics.
    2. Raffer, Kunibert, 1998. "The tobin tax: Reviving a discussion," World Development, Elsevier, vol. 26(3), pages 529-538, March.
    3. Stanley Fischer, 2001. "Exchange Rate Regimes: Is the Bipolar View Correct?," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 3-24, Spring.
    4. Nunnenkamp, Peter, 2002. "IWF und Weltbank: trotz aller Mängel weiterhin gebraucht?," Kiel Discussion Papers 388, Kiel Institute for the World Economy (IfW).
    5. Stephany Griffith-Jones & Stephen Spratt, 2003. "Basel II and Developing Countries: Diversification and Portfolio Effects," FMG Discussion Papers dp437, Financial Markets Group.
    6. Griffith-Jones, Stephany & Segoviano, Miguel Angel & Spratt, Stephen, 2003. "Basel II and developing countries: diversification and portfolio effects," LSE Research Online Documents on Economics 24824, London School of Economics and Political Science, LSE Library.
    7. Nunnenkamp, Peter, 2001. "Umbaupläne und Reparaturarbeiten an der internationalen Finanzarchitektur: eine Zwischenbilanz aus deutscher Perspektive," Kiel Working Papers 1078, Kiel Institute for the World Economy (IfW).
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    More about this item


    Economic policy; capital market efficiency;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading


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