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Willem Buiter Takes Fed and Treasury to Task
naked capitalism — ... come from the Treasury, is bad for accountability and puts Fed independence at risk. The idea of the Fed chief appearing jointly with the Treasury secretary to pitch an initiative to Congress would have been completely unthinkable pre Greenspan. Buiter also argues that if the Fed sustains too much in the way of losses, it will need to go to the Treasury for recapitalization (while it in theory can simply print money, in practice it can undermine monetary policy). From VoxEU: The Fed does not have a full indemnity from the US Treasury even for its ...

Fed Watch: The Fed Understands
Economist's View — Tim Duy on the risks to the Fed's independence, and on whether the Fed's insistence that some actions be conducted in secret "damages the democratic process": The Fed Understands, by Tim Duy: Willem Butier (via Yves Smith) argues that the Fed's actions over the past eighteen months has placed its independence at risk: Without a firm guarantee up front that the Federal government will fully re-capitalize the Fed for losses suffered as a result of the Fed’s exposure to private credit risk, the Fed will have to go cap-in-hand to the US Treasury to beg for ...

Keep it simple: Policy responses to the financial crisis
VoxEU.org: Recent Articles — Tomorrow s G20 meeting in London should not try to resolve everything. It must concentrate on what is urgent and, for the rest, start a process capable of producing a consensus on what must be corrected in the global governance of the economy and financial markets within reasonable deadlines. As we argue in more detail in our new CEPS book ...