With the U.S. Congress’s plans to tinker with our current financial structure, including a weakening, or at least shifting, of the Federal Reserve’s powers, one might expect someone to utter such a line as is shown above. Actually, this was spoken by Charles S. Hamlin, one of the original seven Federal Reserve Board governors, in 1914 (“Under the Federal Reserve system we shall have no more financial panics”). It was less than ten years before our country observed a panic and we’ve had several since.
While we might applaud our elected officials for trying to avoid the event we’re only now seeming to be coming out of, one must also wonder how much is being done simply for showmanship or to appeal to the electorate. It will also be interesting to see if all of the provisions that are planned aren’t eventually overturned by the Supreme Court, given the Federal Reserve’s autonomy.
Is congress overreacting? Are their actions appropriate? Unfortunately, the anti-Wall Street fervor has grown to the point where such steps aren’t surprising. Hopefully, we won’t suffer as a result.
Source for Hamlin quote: Moss, David. The Federal Reserve and the Banking Crisis of 1931. “Harvard Business School Cases.”