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Federal Reserve System: Difference between revisions
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In late December 2011, President [[Barack Obama]] nominated [[Jeremy C. Stein]], a [[Harvard University]] finance professor and a [[Democratic Party of the United States|Democrat]], and [[Jerome Powell]], formerly of [[Dillon Read]], [[Bankers Trust]]<ref name=MW01/> and [[The Carlyle Group]]<ref>{{Cite web |title="Jerome Powell: Visiting Scholar" |url=http://www.bipartisanpolicy.org/about/economic-policy-project/jerome-powell |archive-url=https://web.archive.org/web/20111221012845/http://www.bipartisanpolicy.org/about/economic-policy-project/jerome-powell |archive-date=December 21, 2011}}</ref> and a [[Republican Party of the United States|Republican]]. Both candidates also have [[United States Treasury|Treasury Department]] experience in the Obama and [[George H. W. Bush]] administrations respectively.<ref name="MW01">Goldstein, Steve (December 27, 2011). [http://www.marketwatch.com/story/obama-to-nominate-stein-powell-to-fed-board-2011-12-27?link=MW_home_latest_news "Obama to nominate Stein, Powell to Fed board"]. ''MarketWatch''. Retrieved December 27, 2011.</ref> | In late December 2011, President [[Barack Obama]] nominated [[Jeremy C. Stein]], a [[Harvard University]] finance professor and a [[Democratic Party of the United States|Democrat]], and [[Jerome Powell]], formerly of [[Dillon Read]], [[Bankers Trust]]<ref name=MW01/> and [[The Carlyle Group]]<ref>{{Cite web |title="Jerome Powell: Visiting Scholar" |url=http://www.bipartisanpolicy.org/about/economic-policy-project/jerome-powell |archive-url=https://web.archive.org/web/20111221012845/http://www.bipartisanpolicy.org/about/economic-policy-project/jerome-powell |archive-date=December 21, 2011}}</ref> and a [[Republican Party of the United States|Republican]]. Both candidates also have [[United States Treasury|Treasury Department]] experience in the Obama and [[George H. W. Bush]] administrations respectively.<ref name="MW01">Goldstein, Steve (December 27, 2011). [http://www.marketwatch.com/story/obama-to-nominate-stein-powell-to-fed-board-2011-12-27?link=MW_home_latest_news "Obama to nominate Stein, Powell to Fed board"]. ''MarketWatch''. Retrieved December 27, 2011.</ref> | ||
"Obama administration officials [had] regrouped to identify Fed candidates after [[Peter Diamond]], a Nobel Prize-winning economist, withdrew his nomination to the board in June [2011] in the face of Republican opposition. [[Richard Clarida]], a potential nominee who was a Treasury official under | "Obama administration officials [had] regrouped to identify Fed candidates after [[Peter Diamond]], a Nobel Prize-winning economist, withdrew his nomination to the board in June [2011] in the face of Republican opposition. [[Richard Clarida]], a potential nominee who was a Treasury official under George W. Bush, pulled out of consideration in August [2011]", one account of the December nominations noted.<ref>Lanman, Scott; Runningen, Roger (December 27, 2011). [https://www.bloomberg.com/news/2011-12-27/obama-to-nominate-jerome-powell-jeremy-stein-to-fed-s-board-of-governors.html "Obama to Choose Powell, Stein for Fed Board"]. Bloomberg LP. Retrieved December 27, 2011.</ref> The two other Obama nominees in 2011, [[Janet Yellen]] and [[Sarah Bloom Raskin]],<ref>Robb, Greg (April 29, 2010). [http://www.marketwatch.com/story/obama-nominates-3-to-federal-reserve-board-2010-04-29 "Obama nominates 3 to Federal Reserve board"]. ''[[MarketWatch]]''. Retrieved April 29, 2010.</ref> were confirmed in September.<ref>Lanman, Scott (September 30, 2010). [https://www.bloomberg.com/news/2010-09-30/yellen-raskin-win-fed-board-confirmation-as-vote-on-monetary-easing-nears.html "Yellen, Raskin Win Senate Approval for Fed Board of Governors"]. Bloomberg LP. Retrieved December 27, 2011.</ref> One of the vacancies was created in 2011 with the resignation of [[Kevin Warsh]], who took office in 2006 to fill the unexpired term ending January 31, 2018, and resigned his position effective March 31, 2011.<ref>Censky, Annalyn (February 10, 2011). [https://money.cnn.com/2011/02/10/news/economy/fed_official_warsh_resigns/index.htm "Fed inflation hawk Warsh resigns"]. ''[[CNNMoney]]''. Retrieved December 27, 2011.</ref><ref>Chan, Sewell (February 10, 2011). [https://www.nytimes.com/2011/02/11/business/economy/11fed.html "Sole Fed Governor With Close Ties to Conservatives Resigns"]. ''The New York Times''. Retrieved December 27, 2011.</ref> In March 2012, U.S. Senator [[David Vitter]] ([[Republican Party of the United States|R]], [[Louisiana|LA]]) said he would oppose Obama's Stein and Powell nominations, dampening near-term hopes for approval.<ref>Robb, Greg (March 28, 2012). [http://www.marketwatch.com/story/senator-to-block-quick-vote-on-fed-picks-report-2012-03-28?link=MW_latest_news "Senator to block quick vote on Fed picks: report"]. ''MarketWatch''. Retrieved March 28, 2012.</ref> However, Senate leaders reached a deal, paving the way for affirmative votes on the two nominees in May 2012 and bringing the board to full strength for the first time since 2006<ref>Robb, Greg, [http://www.marketwatch.com/story/stein-sworn-in-as-fed-governor-2012-05-30 "Stein sworn in as Fed governor"], ''MarketWatch'', May 30, 2012. Retrieved May 30, 2012.</ref> with Duke's service after term end. Later, on January 6, 2014, the United States Senate confirmed Yellen's nomination to be chair of the Federal Reserve Board of Governors; she was the first woman to hold the position.<ref>{{Cite news |last=Lowrey |first=Annie |date=January 6, 2014 |title=Senate Confirms Yellen as Fed Chairwoman |work=The New York Times |url=https://www.nytimes.com/2014/01/07/business/economy/Yellen-Senate-Vote.html |url-status=live |url-access=limited |access-date=January 6, 2014 |archive-url=https://ghostarchive.org/archive/20220102/https://www.nytimes.com/2014/01/07/business/economy/Yellen-Senate-Vote.html |archive-date=January 2, 2022}}{{Cbignore}}</ref> Subsequently, President Obama nominated [[Stanley Fischer]] to replace Yellen as the vice-chair.<ref>{{Cite news |last=Puzzanghera |first=Jim |date=January 10, 2014 |title=Obama to nominate Stanley Fischer, 2 others to Federal Reserve seats |url=https://www.latimes.com/business/la-fi-mo-federal-reserve-stanley-fischer-obama-nominate-lael-brainard-20140110-story.html |access-date=December 26, 2021}}</ref> | ||
In April 2014, Stein announced he was leaving to return to Harvard on May 28 with four years remaining on his term. At the time of the announcement, the FOMC "already is down three members as it awaits the Senate confirmation of ... Fischer and [[Lael Brainard]], and as [President] Obama has yet to name a replacement for ... Duke. ... Powell is still serving as he awaits his confirmation for a second term."<ref>Goldstein, Steve, [http://www.marketwatch.com/story/jeremy-stein-to-resign-from-federal-reserve-2014-04-03 "Jeremy Stein to resign from Federal Reserve"], ''[[MarketWatch]]'', April 3, 2014. Retrieved April 3, 2014.</ref> | In April 2014, Stein announced he was leaving to return to Harvard on May 28 with four years remaining on his term. At the time of the announcement, the FOMC "already is down three members as it awaits the Senate confirmation of ... Fischer and [[Lael Brainard]], and as [President] Obama has yet to name a replacement for ... Duke. ... Powell is still serving as he awaits his confirmation for a second term."<ref>Goldstein, Steve, [http://www.marketwatch.com/story/jeremy-stein-to-resign-from-federal-reserve-2014-04-03 "Jeremy Stein to resign from Federal Reserve"], ''[[MarketWatch]]'', April 3, 2014. Retrieved April 3, 2014.</ref> | ||
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{{Main|History of central banking in the United States}} | {{Main|History of central banking in the United States}} | ||
The first attempt at a national currency was during the | The first attempt at a national currency was during the American Revolutionary War. In 1775, the Continental Congress, as well as the states, began issuing paper currency, calling the bills "[[Early American currency|Continentals]]".<ref>{{Cite web |title=Timeline of U.S. Currency History |url=https://uscurrency.gov/history-american-currency |archive-url=https://web.archive.org/web/20161004114334/https://uscurrency.gov/history-american-currency |archive-date=October 4, 2016 |access-date=June 8, 2016 |publisher=U.S. Currency Education Program}}</ref> The Continentals were backed only by future tax revenue, and were used to help finance the Revolutionary War. Overprinting, as well as British counterfeiting, caused the value of the Continental to diminish quickly. This experience with paper money led the United States to strip the power to issue Bills of Credit (paper money) from a draft of the new Constitution on August 16, 1787,<ref>{{Cite web |title="Mr. Govr. MORRIS moved to strike out "and emit bills on the credit of the U. States" – If the United States had credit such bills would be unnecessary: if they had not, unjust & useless. ... On the motion for striking out N. H. ay. Mas. ay. Ct ay. N. J. no. Pa. ay. Del. ay. Md. no. Va. ay. N. C. ay. S. C. ay. Geo. ay." |url=http://avalon.law.yale.edu/18th_century/debates_816.asp |access-date=April 30, 2012 |publisher=Avalon.law.yale.edu}}</ref> as well as banning such issuance by the various states, and limiting the states' ability to make anything but gold or silver coin legal tender on August 28.<ref>US Constitution Article 1, Section 10. "no state shall ..emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts;"</ref> | ||
In 1791, the government granted the [[First Bank of the United States]] a charter to operate as the U.S. central bank until 1811.<ref name="A Brief History of Our Nation's Paper Money">{{Cite web |last=Flamme |first=Karen |title=1995 Annual Report: A Brief History of Our Nation's Paper Money |url=http://www.frbsf.org/publications/federalreserve/annual/1995/history.html |archive-url=https://web.archive.org/web/20100227093922/http://www.frbsf.org/publications/federalreserve/annual/1995/history.html |archive-date=February 27, 2010 |access-date=August 26, 2010 |publisher=Federal Reserve Bank of San Francisco}}</ref> The First Bank of the United States came to an end under [[James Madison|President Madison]] when Congress refused to renew its charter. The [[Second Bank of the United States]] was established in 1816, and lost its authority to be the central bank of the U.S. twenty years later under [[Andrew Jackson|President Jackson]] when its charter expired. Both banks were based upon the Bank of England.<ref>{{Cite book |url=https://books.google.com/books?id=EkUTaZofJYEC |title=British Parliamentary reports on international finance: the Cunliffe Committee and the Macmillan Committee reports |publisher=Ayer Publishing |year=1978 |isbn=978-0-405-11212-6 |quote=description of the founding of Bank of England: 'Its foundation in 1694 arose out the difficulties of the Government of the day in securing subscriptions to State loans. Its primary purpose was to raise and lend money to the State and in consideration of this service it received under its Charter and various Act of Parliament, certain privileges of issuing bank notes. The corporation commenced, with an assured life of twelve years after which the Government had the right to annul its Charter on giving one year's notice. Subsequent extensions of this period coincided generally with the grant of additional loans to the State'}}</ref> Ultimately, a third national bank, known as the Federal Reserve, was established in 1913 and still exists to this day. | In 1791, the government granted the [[First Bank of the United States]] a charter to operate as the U.S. central bank until 1811.<ref name="A Brief History of Our Nation's Paper Money">{{Cite web |last=Flamme |first=Karen |title=1995 Annual Report: A Brief History of Our Nation's Paper Money |url=http://www.frbsf.org/publications/federalreserve/annual/1995/history.html |archive-url=https://web.archive.org/web/20100227093922/http://www.frbsf.org/publications/federalreserve/annual/1995/history.html |archive-date=February 27, 2010 |access-date=August 26, 2010 |publisher=Federal Reserve Bank of San Francisco}}</ref> The First Bank of the United States came to an end under [[James Madison|President Madison]] when Congress refused to renew its charter. The [[Second Bank of the United States]] was established in 1816, and lost its authority to be the central bank of the U.S. twenty years later under [[Andrew Jackson|President Jackson]] when its charter expired. Both banks were based upon the Bank of England.<ref>{{Cite book |url=https://books.google.com/books?id=EkUTaZofJYEC |title=British Parliamentary reports on international finance: the Cunliffe Committee and the Macmillan Committee reports |publisher=Ayer Publishing |year=1978 |isbn=978-0-405-11212-6 |quote=description of the founding of Bank of England: 'Its foundation in 1694 arose out the difficulties of the Government of the day in securing subscriptions to State loans. Its primary purpose was to raise and lend money to the State and in consideration of this service it received under its Charter and various Act of Parliament, certain privileges of issuing bank notes. The corporation commenced, with an assured life of twelve years after which the Government had the right to annul its Charter on giving one year's notice. Subsequent extensions of this period coincided generally with the grant of additional loans to the State'}}</ref> Ultimately, a third national bank, known as the Federal Reserve, was established in 1913 and still exists to this day. | ||