The Federal Register has been published continuously since March 14, 1936, and it provides the only complete history of the regulations of the federal government with the text of all cha
Trang 1The FMC promulgates rules and regulations
to interpret, enforce, and ensure compliance
with shipping and related statutes by common
carriers and other persons subject to those
statutes
The staff of the FMC administers programs
to ensure compliance with the provisions of the
shipping statutes These programs include the
submission of information, and field
investiga-tions and audits of activities and practices of
common carriers, terminal operators, and
others subject to the shipping statutes The
FMC also conducts rate analyses, studies, and
economic reviews of current and future trade
conditions, including the extent and nature of
competition in various trade areas
The FMC conducts investigations of
prac-tices by foreign governments and foreign
carriers that adversely affect the U.S shipping
trade The commission works with the
DEPART-MENT OF STATE to eliminate discriminatory
practices on the part of foreign governments
against U.S.-flag shipping and to promote
fairness between the United States and its
trading partners
The FMC has sought to become more
efficient by implementing an electronic filing
system By 2002 it was able to issue service on
companies electronically, which proved crucial
during the fall of 2001, when the anthrax crisis
prevented the delivery of mail by theU.S.POSTAL
SERVICEin some areas In addition, it now posts
filings of important public proceedings on its
web site
FURTHER READINGS
Federal Maritime Commission 2003 Annual Program
Performance Report Available online at http://www.
fmc.gov (accessed July 23, 2009).
“Federal Maritime Commission News.” 2004–2009 U.S.
Politics Today Available online at http://uspolitics.
einnews.com/news/fmc; website home page: http://
uspolitics.einnews.com (accessed September 2, 2009).
U.S Government Manual Website Available online at http://
www.gpoaccess.gov/gmanual/index (accessed July 21,
2009).
FEDERAL MEDIATION
AND CONCILIATION SERVICE
The Federal Mediation and Conciliation Service
(FMCS) is an independent agency of the U.S
government that seeks to prevent or settle
disputes between labor unions and management
that affect interstate commerce The FMCS
was established by the 1947LABOR-MANAGEMENT
RELATIONS ACT (61 Stat 153 [29 U.S.C.A
§ 172]), better known as the TAFT-HARTLEY ACT Mediators for the FMCS have no law enforce-ment authority and must rely on their own persuasive techniques The FMCS has its headquarters in Washington, D.C., and sup-ports 68 field offices
The Labor-Management Relations Act requires that parties to a labor contract must file a notice with the Federal MEDIATION and Conciliation Service (FMCS) if agreement is not reached within 30 days before a contract termination or reopening date The FMCS is required by the act to avoid mediation of disputes that would have only a minor effect on interstate commerce However, in seeking to promote labor peace through the encourage-ment and developencourage-ment of long-term, stable relationships between labor and management, the FMCS has taken a broad view of its statutory mandate and has involved itself in disputes that have little effect on interstate commerce
The FMCS provides both mediation and conciliation services Most of its interventions involve mediation, which is a voluntary, non-binding form of dispute resolution A mediator attempts to facilitate an agreement by conduct-ing meetconduct-ings and coordinatconduct-ing discussions A mediator may make substantive suggestions as
an active participant to help the parties reach a voluntary agreement
FMCS mediators must be neutral and must have a minimum of seven years’ experience in bargaining methods and tactics Mediators must maintain strict confidentiality regarding the positions of both sides and may be removed for bias or a failure to maintain confidences The FMCS employs more than 200 mediators, who typically handle about 30,000 cases every year
Conciliation is a different form of dispute resolution A conciliator acts as a neutral THIRD PARTY, serving as a resource person for both sides Generally, a conciliator will not partici-pate in any joint meetings between the parties
Instead, a conciliator will present each party’s position to the other in separate sessions The conciliator may also suggest solutions, especially when negotiations have reached a stalemate
The FMCS will also provide ARBITRATION support Arbitration is an informal method of adjudication, in which both parties present their side of the case, and an arbitrator decides who will prevail Upon the joint request of a union
FEDERAL MEDIATION AND CONCILIATION SERVICE 379 FEDERAL MEDIATION AND CONCILIATION SERVICE 379
Trang 2and an employer, the FMCS will help to select arbitrators from a roster of private citizens
The agency also employs preventive media-tion techniques once an agreement is reached
These techniques include the organization of or participation in labor-management committees, which serve as outlets for discussing problems and the training of labor and management in ALTERNATIVE DISPUTE RESOLUTIONtechniques This training is often presented through conferences and seminars
The FMCS developed web technology that provides the public with comprehensive infor-mation More importantly, FMCS has shifted much of the work done by mediators from paper to electronic documents, which are accessible through its web site By 2009 FMCS had in place conference centers linked to the INTERNET, along with other technology, that provide online mediation
FURTHER READINGS Federal Mediation and Conciliation Service Available online
at www.fmcs.gov (accessed September 23, 2009).
Newman, William A 1990 “Use of Non-Adjudicative Third-Party Dispute Resolution Methods by Dispute Resolution Agencies of the United States Government ” Ohio Northern University Law Review 17.
U.S Government Manual Website Available online at www.
gpoaccess.gov/gmanual (accessed November 10, 1993).
FEDERAL NATIONAL MORTGAGE ASSOCIATION
The Federal National Mortgage Association (known colloquially as “Fannie Mae”) is the largest U.S corporation The federally chartered Fannie Mae holds a unique place in the national mortgage market Established by federal law in
1934, it was originally a NEW DEAL program
Since the 1970s it has been a privately owned, for-profit corporation that is regulated and overseen by the federal government Its chief purpose is to buy federally guaranteed home mortgages on the secondary market, thus freeing lending institutions to make more funds available for new mortgages for low- to middle-income home buyers Tighter federal regulation began in the early 1990s, even as critics in Washington, D.C., argued that Fannie Mae should be completely privatized
A broad federal response to the Great Depression gave rise to Fannie Mae In the 1930s the national housing market was devas-tated when a tight supply of money, coupled
with a failure of banks, made mortgage financ-ing extremely difficult to secure Congress responded first in 1934 by creating the Federal Housing Administration (FHA), a body charged with stabilizing the mortgage market by insur-ing home loans (National Housinsur-ing Act of 1934, subch II [12 U.S.C.A §§ 1707–1715z-11 (1980)]) This measure was not enough to salvage the mortgage market, however In 1935 lawmakers created the Reconstruction Finance Corporation (15 U.S.C.A § 601[1983], repealed
by Reorganization Plan of 1957 No 1 [5 U.S.C
A § 903 note (1977)]), and in 1938, they added
a subsidiary, Fannie Mae (Federal National Mortgage Association Charter Act[12 U.S.C.A
§§ 1716–1723h (1980)]) Fannie Mae’s federal charter required it to buy FHA-insured loans from mortgage lenders, thus increasing the supply of mortgage funds available for lending Fannie Mae played a major role in the post– World War II boom years in housing Its portfolio grew after it was authorized to purchase Veterans Administration (VA) loans
in addition to FHA loans, a measure that fueled
an enormous expansion of housing in the late 1940s and 1950s In 1954 the federal govern-ment began issuing stock in Fannie Mae as part
of a plan to share responsibility for the corporation’s financial health with lending institutions It issued PREFERRED STOCK to the TREASURY DEPARTMENT and nonvoting COMMON STOCK to mortgage lenders For the latter, purchase of stock became a prerequisite for selling mortgages to Fannie Mae
A shift to private ownership began in 1968 First, Congress split Fannie Mae into two entities: One retained the name Fannie Mae, and the other was called the GOVERNMENT NATIONAL MORTGAGE ASSOCIATION(GNMA), under authority of title III of the National Housing Act (12 U.S.C.A §§ 1716–1716b [1983]) Whereas GNMA, also known as “Ginnie Mae,” was chartered to provide funding for federally assisted housing programs, the new Fannie Mae retained its original mission but with a new source of funding: Lawmakers wanted it to become self-sustaining through fees and securi-ties In 1970 the federal government sold its share of stock to Fannie Mae for $216 million, severing its last financial tie to the corporation Two years later, Fannie Mae expanded the scope
of its investments by purchasing non-federally guaranteed loans as well
380 FEDERAL NATIONAL MORTGAGE ASSOCIATION
Trang 3Despite its financial independence, the
corporation remains closely linked by its charter
to the federal government Federal oversight
remained, as did Fannie Mae’s mission to
provide services to low-, moderate-, and
middle-income homebuyers During the 1970s
and 1980s, the corporation grew enormously,
particularly through the securities market,
where it sold so-called mortgage-backed
securi-ties, which are pools of mortgage loans acquired
from lenders for which the acquiring
corpora-tion earns guarantee fees Its stock was actively
sought, primarily because of profitability and a
sense on Wall Street that the federal
govern-ment would always back up the corporation in
bad times In fact, the enormous flow of money
through Fannie Mae rivaled that of the nation’s
major lending institutions Fannie Mae
volun-tarily registered its common stock with the
SECURITIES AND EXCHANGE COMMISSION (SEC) in
2003, thus requiring it to file periodic financial
disclosures with the SEC under the Securities
Exchange Act of 1934
Calls for reform of Fannie Mae began in the
1980s The anti-regulatory administration of
PresidentRONALD REAGANsuggested privatizing it
completely But action only followed a scandal
of the savings and loan industry, in which greed
and mismanagement plunged many of the
nation’s thrifts into insolvency—at a cost to
taxpayers of hundreds of billions of dollars
Motivated to protect the federal government
from suffering such losses again, Congress in
1992 passed the Federal Housing Financial
Enterprises Safety and Soundness Act (Pub L
No 102-550, § 1301, 12 U.S.C.A § 4501) The
law tightened regulations governing Fannie Mae
and related federally chartered financial
institu-tions Specifically, it requires these institutions
to pass periodic review to ensure that they
maintain adequate capital according to risk
criteria determined by Congress This oversight
is conducted by the Office of Federal Housing
Enterprise, a part of theDEPARTMENT OF HOUSING
AND URBAN DEVELOPMENT Under law, such a
corporation must submit a plan to restore its
capital levels if it fails review Significant
undercapitalization can lead to the appointment
of a conservator to run the corporation
Congress also prohibited excessive executive
and staff salaries At the same time, it gave
Fannie Mae additional responsibility for helping
low-income home buyers
Major trouble hit the corporation in the mid-2000s, when significant accounting pro-blems put both Fannie Mae and Freddie Mac in the spotlight and at risk In July 2008, President GEORGE W BUSH announced his plan to rescue Fannie Mae and Freddie Mac, in an attempt to stop or stay the sliding sub-prime mortgage crisis and its effect on the nation’s overall economy The plan called for Congress to authorize up to 18 months’s funds (billions of dollars) to help the companies through a critical period This would be done by government investments, e.g., government-purchased com-pany stocks and loans Opposition from both parties in Congress was initially substantial
But the reality of the companies’s role in the national economy was indisputable Together, Fannie Mae and Freddie Mac either held or guaranteed mortgages valued at more than $5 trillion dollars, and both companies were rapidly sinking into debt from defaulted mortgage loans
As of July 2008, Fannie Mae carried debt of $800 million, while Freddie Mac had about $740 million in debt According to the Mortgage Bankers Association, nearly four percent of prime mortgages were past due or inFORECLOSUREas of September 2007, the highest rate since the group started tracking prime and sub-prime mortgages separately in 1998 The default rate for sub-prime loans was almost one in four, or 24 percent The combined rate of delinquency and foreclosure was 7.3 percent, higher than at any time since the group started tracking data in 1979 Accord-ing to the IMF in its April 2008 Global Financial Stability Report, global losses could reach $945 billion once other related losses, such as in commercial real estate, were included
In September 2008 the Treasury Secretary announced the government takeover (conserva-torship) of Fannie Mae and Freddie Mac, in the form of government-owned (taxpayer-funded) and controlled stock, representing an extraordi-nary move by the government of the world’smost eminent free enterprise nation The news of government intervention in private enterprise made front-page headlines around the world In the next few days, a modest surge in the STOCK MARKETsignaled hope, but the nation’smortgage foreclosures had not yet peaked in the midst of the now-global financial meltdown
By August 2009 Fannie Mae needed an additional $10.7 billion, as the value of non-performing loans continued to burden it At
FEDERAL NATIONAL MORTGAGE ASSOCIATION 381
Trang 4that time, it had used up approximately $45 billion of the $200 billion reserve slated to keep
it afloat However, financial indicators pointed toward a leveling-off of losses as there appeared
to be a slowdown in the increase of estimated loan defaults, and the nation’s economy appeared heading toward slow recovery
FURTHER READINGS Bajaj, Vikas and Louise Story “Mortgage Crisis Spreads Past Subprime Loans ” The New York Times, 12 February 2008.
CNN News 2009 “Fannie Mae Needs Another $10.7B in Federal Aid.” August 6, 2009 Available online at http://
money.cnn.com/2009/08/06/news/companies/Fannie_-Mae_earnings/“>; website home page: http://www.cnn.
com/ (accessed September 20, 2009) Dodd, Randall and Paul Miller “Outbreak: U.S> Subprime Contagion ” Finance & Development, Vol 45, No.2, June 2008.
Fannie Mae Website Homepage and various links 2009.
Available online at http://www.fanniemae.com; website home page: http://www.fanniemae.com/ (accessed Sep-tember 20, 2009)
“Federal National Mortgage Association (Fannie Mae)” The New York Times, September 24, 2008.
Froomkin, A Michael 1995 “Reinventing the Government Corporation ” University of Illinois Law Review.
Labaton, Stephen “Bush Offers Plan to Save Fannie Mae, Freddie Mac ” The New York Times, 14 July 2008.
Malloy, Robin Paul 1986 “The Secondary Mortgage Market: A Catalyst for Change in Real Estate.” Southern Methodist University Law Review (February).
CROSS REFERENCE Housing and Urban Development Department.
FEDERAL PROCEDURE See CIVIL PROCEDURE
FEDERAL QUESTION
An issue directly involving the U.S Constitution, federal statutes, or treaties between the United States and a foreign country
Application of these kinds of law to particular cases or interpretation of the mean-ings of these laws is a power within the authority of the federal courts The authority
to hear lawsuits that turn on a point of federal law is called federal question jurisdiction Under
28 U.S.C.A § 1331 (1993), U.S district courts
“shall have ORIGINAL JURISDICTION of all civil actions arising under the Constitution, laws, or treaties of the United States.” Unlike federal jurisdiction based upon DIVERSITY OF CITIZENSHIP under 28 U.S.C.A § 1332 (Supp 2003), federal question jurisdiction is not dependent on the
parties meeting a prescribedAMOUNT IN CONTRO-VERSY
CROSS REFERENCES Jurisdiction; Treaty.
FEDERAL REGISTER
A daily publication that makes available to the public the rules, regulations, and other legal notices issued by federal administrative agencies Executive Orders and agency regulations were promulgated at a furious pace in the early days of the NEW DEAL under President FRANKLIN
D.ROOSEVELT, but there was no requirement that these regulations be centrally filed or regularly published It became increasingly difficult to know which rules were in effect at any one time Two important cases were pursued all the way
to the U.S Supreme Court before it was discovered that the administrative regulations that the defendants were accused of violating were no longer in effect Newspapers all over the country castigated the government for prosecuting people under nonexistent laws The furor led to enactment in 1935 of the Federal Register Act, now part of 44 U.S.C.A
§ 1501 et seq., a law that established the Federal Register as a daily gazette for the government Orders from federal agencies or the EXECUTIVE BRANCHdo not become effective until they have been published in the Federal Register In 1937 the act was amended to create the CODE OF FEDERAL REGULATIONS, a set of paperback books that arrange effective regulations from the Federal Register by subject
The Federal Register includes (1) presidential proclamations and executive orders; (2) other documents that the president from time to time determines to have general applicability and legal effect; (3) documents that are required by an act
of Congress to be published; and (4) other documents selected for publication by the director of the Federal Register Documents are placed on file for public inspection at the Office of the Federal Register in Washington, D.C., on the day before they are published, unless an earlier filing is requested by the agency issuing them The Federal Register has been published continuously since March 14, 1936, and it provides the only complete history of the regulations of the federal government with the text of all changes Regulations are published in the order in which they are filed, but specific documents can be
382 FEDERAL PROCEDURE
Trang 5located by consulting a table of contents in each
daily issue or in the monthly index Separate guides
are prepared, to note which regulations have been
changed in an issue (“List of C.F.R Parts Affected
in This Issue”) and the regulations changed at any
time since the beginning of the month
(“Cumula-tive List of C.F.R Parts Affected During April,” for
example) A separate pamphlet is published along
with the monthly index that lists references to all
the changes in regulations since the last time the
affected title of the Code of Federal Regulations
was revised All references are made to the Code of
Federal Regulations because it is the topically
organized version of the regulations that are
published daily in the Federal Register
The text of any document in the Federal
Register can be shown as good and sufficient
evidence that the document was properly filed
and that it is, therefore, good law If a regulation
has not been published in the Federal Register, a
governmental agency would have to show that
an individual actually knew about it before it
could prosecute the person for violating it This
encourages the agencies to be sure that their
regulations are published in the one place where
everyone can expect to find them
As of July 31, 2003, the database for Federal
Register for each year subsequent to 1995, (and
subsequent to Volumes 60), was available and
searchable online at http://www.gpoaccess.gov/
fr/index.html Documents may be retrieved in
ASCII format (full text, graphics omitted),
Adobe Portable Document Format,“PDF” (full
text with graphics), and “SUMMARY” format
(abbreviated text) The 1994 Federal Register
(Volume 59) database was also available but did
not have the same search capabilities, as it
contains no fields or section identifiers It is also
possible to browse the current issue of the
Federal Register at the same site Also accessible
is an online History of Line Item Veto Notices
(as published in the Federal Register) prior to
U.S Supreme COURT OPINION No 97-1374
(argued April 27, 1998—decided June 25, 1998
FEDERAL REGULATION
SeeADMINISTRATIVE AGENCY;REGULATION
FEDERAL REPORTER®
A legal reference source primarily covering
published decisions of federal appellate courts
The decisions are published in paperback Federal Reporter pamphlets (advance sheets) shortly after they are handed down and then are issued in a hardbound volume when enough cases have accumulated to fill a book The hardbound volumes are consecutively num-bered as they are published After 300 volumes had been issued, a second series was started in
1924 Following the release of 999 volumes
in the second series, the third series started in 1993
A case may be found in the Federal Reporter
in the volume whose number is that given first
in the citation for the case If the case was decided after 1924, the citation will refer to the second series of the Federal Reporter For example, the case of O’Connor v Lee-Hy Paving Co., decided by the U.S Court of Appeals for the Second Circuit in 1978, is cited as 579 F.2d
194 It can be located on page 194 of volume
579 in the Federal Reporter, second series
The Federal Reporter covers decisions by (1) theCIRCUIT COURTof appeals, the district courts, the former U.S Court of Customs and Patent Appeals, the former U.S COURT OF CLAIMS, and the Court of Appeals of the District of Columbia for the years from 1880 to 1932; (2) the U.S COURTS OF APPEALSand the former U.S
Court of Customs and Patent Appeals for the years beginning with 1932; (3) the U.S
Emergency Court of Appeals from 1942 to
1961 and the U.S TEMPORARY EMERGENCY COURT
OF APPEALSfrom 1972 to the present; and (4) the former U.S Court of Claims from 1960 to the fall of 1982; thereafter it became the U.S Claims Court
CD-ROM format is available Other federal court opinions are published in a series called theFEDERAL SUPPLEMENT
CROSS REFERENCE Reporter.
FEDERAL RESERVE BOARD The Federal Reserve System, established by the Federal Reserve Act (12 U.S.C.A § 221), is the central BANK OF THE UNITED STATES The Federal Reserve is charged with making and adminis-tering policy for the nation’s credit and monetary affairs and helps to maintain the banking industry in sound condition
FEDERAL RESERVE BOARD 383
Trang 6The Federal Reserve Board of Governors, or Federal Reserve Board, has broad supervisory powers over the functions of the Federal Reserve System It determines general monetary, credit, and operating policies for the Federal Reserve System and formulates the rules and regulations that are necessary to carry out the purposes of the Federal Reserve Act A primary function of the board is to influence credit conditions, such as interest rates, in the nation’s marketplace The board regulates the amount of credit that may be initially extended and subsequently maintained
on any securities, in order to prevent an excessive use of credit for their purchase or carrying
The Federal Reserve Board office is located
in Washington, D.C The board is composed of
seven members, appointed by the president of the United States with the ADVICE AND CONSENT
of the Senate The chair of the board must be chosen from among the seven governors and serves a four-year renewable term Other board members serve one nonrenewable 14-year term, with one governor’s term expiring every other January By EXECUTIVE ORDER, the chair of the board is also a member of the National Advisory Council on International Monetary and Finan-cial Policies
Following the passage of the Federal Reserve Act, Congress attempted to claim exclusive control over the management of monetary policy It asserted that this was the proper function of Congress, as the constitutionally
The Fed and the 2008 Recession
Arecession is a period of economic
decline that is marked by
wide-spread unemployment, a fall in
econom-ic output, and the decline in value of
stocks and other financial instruments
The Federal Reserve (often referred to as
the Fed)is charged with maintaining the
stability of the U.S economy and has
several tools it can employ to improve
the business climate These tools were
put to the test when the U.S economy
went into recession in 2008 Though the
collapse of September 2008 was
dramat-ic, with Wall Street suffering dramatic
losses, economists believe the recession
started as early as April 2008 Federal
Reserve chairman Ben Bernanke moved
swiftly in the fall of 2008 to stabilize the
economy and then began working to
grow it Despite these efforts, Bernanke
drew criticism for bailing out banks
while average Americans lost their homes
and jobs
The Federal Reserve has three means
of dealing with a financial crisis by
managing the U.S money supply First,
it can lower the discount rate or interest
rate it charges to major banks that
borrow money from it on a short term basis Second, it can lower the reserve requirements of banks; banks must have
on hand a certain percentage of the deposits from customers Third, it can raise the amount of money in the economy through its open market opera-tions This is done by the Fed repurchas-ing government securities such as Trea-sury bills from investors
The U.S housing market, which had fueled much of the economic expansion of the 2000s, began to lose momentum in 2007 The Fed began cutting interest rates in the fall
of 2007, in hopes of loosening a tighten-ing credit market and as a way to stimulate economic growth The rate eventually dropped to zero, yet this was not enough to prevent a recession In November 2008 the Fed began to use other ways of injecting money into the system It used methods called “quanti-tative easing.” Bernanke had initially opposed these methods but gave way once the discount rate was at rock bottom These methods included buying large amounts of longer-term Treasury
bonds and mortgage-backed securities issued by government-sponsored com-panies such as Fannie Mae and Freddie Mac It also purchased commercial debt issued by private companies and con-sumer lenders
The recession was deepened by the collapse of the investment banking firm Lehman Brothers, Washington Mutual Bank, and the near collapse of the insurer American International Group (AIG) In early October 2008, Congress passed the Emergency Economic Stabilization Act
of 2008 Known as the bank bailout law, the act authorized the TREASURY DEPART-MENTto buy up to $700 billion of toxic assets from banks Most of these assets were mortgage-backed securities, which had lost much of their value with the collapse of the housing bubble and the rise of home foreclosures Congress sought to stabilize the financial markets and unfreeze credit Banks had ceased to loan money even to reliable customers The Federal Reserve leadership in Washington and at the Federal Reserve Bank of New York played key roles in dealing with toxic assets as well By
384 FEDERAL RESERVE BOARD
Trang 7appointed keeper of the nation’s purse The
Banking Act of 1935 curbed Congress’s claims
by increasing the power of the executive
branch’s appointees to the board In the
1970s, the Humphrey Hawkins Act (Pub L
No 95-253, 15 U.S.C.A § 3101 et seq.)
reformed the Federal Reserve to require
bian-nual congressional oversight hearings on
mon-etary policy and the decisions of the board
Reports on these hearings are presented to
Congress by the chair of the board of governors
In 1999, Congress passed the Financial
Services Modernization Act (PL 106-102,
November 12, 1999, 113 Stat 1338) This
legislation rewrote banking laws that had
prevented commercial banks, securities firms,
and insurance companies from merging their
businesses In addition, the law directed the Federal Reserve Board to accept existing reports that a bank has filed with other federal and state regulators, thus reducing time and expense for the bank Moreover, the Federal Reserve Board may examine the insurance and brokerage subsidiaries of a bank only if reasonable cause exists to believe that the subsidiary is engaged in activities that pose a material risk to bank depositors The act contained many more such provisions that restrict the ability of the Federal Reserve Board to regulate the new type of bank that the law contemplated
The board of governors interacts with the other parts of the Federal Reserve System, including the twelve Federal Reserve banks, their 25 branches situated throughout the
December 2008 the Fed had spent $1.2
trillion making emergency loans and
buying financial assets This amount was
separate from the $700 billion
appropri-ated by Congress in October The Fed
loaned money to banks, credit card
companies, and some large businesses
In addition, the Fed began paying
higher interest rates in October to banks
for deposits it held for reserve
require-ments Banks wasted no time in depositing
large sums The amount on deposit with
the Fed went from $10 billion in August to
$880 billion by January 2009 Though
banks benefited from higher returns from
a stable government source, this
discour-aged them from expanding credit Though
Bernanke and other Fed officers stated
that rates would decline, forcing banks to
lend money, by December 2009, the
reserve balances were over $1 trillion
The amount of money spent by the
Federal Reserve since September 2008 is
staggering Its balance sheet jumped
from about $900 billion to more than
$2 trillion, due to the printing of new
money that has been lent out to fight the
recession Once it purchases all the
mortgage-backed debt and consumer
debt it has sought, the Fed’s balance
sheet will total about $3 trillion Never
before has the Federal Reserve played
such a prominent role during an
eco-nomic crisis By the end of 2009,
economists were cautiously optimistic
that the U.S economy would come out
of recession sometime in 2010
Such high visibility has also invited criticism and calls for reform of the Federal Reserve Republicans have complained that the Fed’s regulatorypowers are too vast and heavy-handed, while Democrats and Republicans alike have complained about the bank bailouts Democrats have also contended that the Fed failed to properly protect consumers from toxic financial instruments By late 2009 legislation was moving through the House and Senate that would greatly curtail the Fed’s regulatory powers In a November 27, 2009, Washing-ton Post op-ed, Bernanke spoke out against removing the Fed’s oversight of banks He also questioned the repeal of a 1978 law that was meant to protect monetary policy
“from short term political influence.” He acknowledged, “The proposed measures are at least in part the product of public anger over the financial crisis and the government’s response, particularly the rescues of some individual financial firms.”
However, the Fed had to act to“prevent a global economic catastrophe that could have rivaled the Great Depression in length and severity, with profound consequences for our economy and society.” Though the Fed, like other government agencies, failed
to prevent excessive financial risk-taking, Bernanke declared that the Fed had toughened its rules and oversight He rebutted critics who thought the Federal
Reserve needed to be more transparent, noting that it published“detailed minutes
of policy meetings” and its balance sheet weekly Whether his arguments succeed will likely be known in 2010, when Congress is expected to pass a financial reform law
How soon the U.S economy comes out of recession and what the long-term consequences are of heavy government borrowing will likely be ways of measur-ing the effectiveness of the actions taken
by the Federal Reserve
FURTHER READINGS Gasparino, Charles 2009 The Sellout: How Three Decades of Wall Street Greed and Government Mismanagement Destroyed the Global Financial System New York: HarperBusiness.
Goodman, Peter 2008 “Taking Hard New Look at a Greenspan Legacy ” New York Times October 8.
Morris, Charles 2009 The Two Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash New York: Public Affairs.
Phillips, Kevin 2008 Bad Money: Reckless Finance, Failed Politics, and the Global Crisis
of American Capitalism New York: Viking Sorkin, Andrew Ross 2009 Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System and Themselves New York: Viking Varchaver, Nicholas, and Kate Benner 2008.
“The $55 Trillion Question.” Fortune September 30.
FEDERAL RESERVE BOARD 385
Trang 8United States, other member commercial banks, the powerful Federal Open Market Committee (FOMC), the Federal Advisory Council, and the Consumer Advisory Council
Through these arms of the Federal Reserve System, board members help to maintain a commercial banking system that responds to the needs of the nation
Federal Reserve Banks and Their Branch Members
The 12 Federal Reserve banks are located
in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St Louis, Minneapolis, Kansas City, Dallas, and San Francisco The powers of these central banks include transferring funds, handling govern-ment deposits and debt issues, supervising and regulating banks, and acting as lenders of last resort The 25 branches of these banks are located throughout the country Along with supervising these member banks, the board has jurisdiction over the administration of other state banks and trust companies The board may also grant authority to member banks to establish branches in foreign countries or dependencies or insular possessions of the United States
The board of governors elects directors and officers of the Reserve banks These
representatives are divided into three classes Class A directors and officers represent the Federal Reserve’s stockholding member banks Class B directors and officers are elected from various industries or banks within their districts
to represent the interests of their districts’ economies The six Class A and six Class B directors are elected by the stockholding member banks Class C directors hold no office or position in any bank They are elected
by the board of governors to terms in office that are arranged to expire, in conjunction with the terms of office in the A and B classes,
in alternating years Class C directors work in consultation with the other directors and fill vacancies as necessary
The Federal Open Market Committee
As part of the FOMC, the board works with other bank representatives to develop key policies for the Federal Reserve The open market operations of the FOMC determine the control of the nation’s money supply and the prevailing economic conditions of the country Twelve voting members form this committee Seven members are the governors from the board, and five members are pre-sidents of district banks The board, therefore, has the majority of the votes within the committee The chair of the board of governors also presides as the chair of the FOMC When the FOMC meets, approximately eight times a year, the board makes suggestions and policy surrounding the purchase and sale of securities
in the open market Such transactions supply bank reserves to support the credit and money that is needed for long-term economic growth,
to offset cyclical economic swings, and to accommodate seasonal demands of businesses and consumers for money and credit
The Federal Advisory Council
The board of governors confers with the Federal Advisory Council on general business conditions throughout the nation The Federal Advisory Council advises the board on matters within the board’s jurisdiction The council is composed of
12 members, one from each Federal Reserve district It meets in Washington, D.C., at least four times per year, and more often if the board
of governors calls it to do so
Ben Bernanke became
chair of the Federal
Reserve Board in
2006 The board
determines monetary
and credit policies
and influences
national interest
rates.
AP IMAGES
386 FEDERAL RESERVE BOARD
Trang 9The Consumer Advisory Council
The board of governors confers with the
Consumer Advisory Council on the
responsi-bilities of the board in the field of CONSUMER
CREDIT protection Congress established the
council in 1976 when it restructured the
Advisory Committee on Truth in Lending,
initially established under theTRUTH IN LENDING
ACT (15 U.S.C.A § 1601 et seq [1968]) The
council is composed of approximately 30
members from across the country It represents
consumer and creditor interests and advises the
board on its responsibilities under laws such as
Truth in Lending, Equal Credit Opportunity
(88 Stat 1521, 15 U.S.C.A 1691 et seq.), and
Home Mortgage Disclosure (89 Stat 1125, 12
U.S.C.A 2801 et seq.)
Web site: www.federalreserve.gov
FURTHER READINGS
Colander, David C., and Dewy Daane, eds 1994 The Art of
Monetary Policy New York: Sharpe.
Federal Reserve Board Web site Available online at http://
www.federalreserve.gov (accessed July 23, 2009).
Federal Reserve Subcommittee on Economic Growth and
Credit Formation of the Committee on Banking,
Finance, and Urban Affairs 1994 Conduct of Monetary
Policy: Report of the Federal Reserve Pursuant to the
Full Employment and Balanced Growth Act of 1978, P.L.
95–523, and the State of the Economy: Hearing before
the Subcommittee on Economic Growth and Credit
Formation of the Committee on Banking, Finance, and
Urban Affairs (February 22) Available online at http://
www.archive.org/stream/conductofmonetar1994unit/
conductofmonetar1994unit_djvu.txt; website home
page: http://www.archive.org (accessed September 13,
2009).
Harvrilesky, Thomas 2007 The Pressures on American
Monetary Policy New York: Springer-Verlag.
Mankiw, Gregory N 1997 Monetary Policy Chicago: Univ.
of Chicago Press.
U.S Senate 1993 The Federal Reserve President’s Views on
Monetary Policy and Economic Conditions: Hearing
before the Committee on Banking, Housing, and Urban
Affairs S Hr’g No 103-98 (March 10).
U.S Senate 1994 Federal Reserve: Recent Monetary Policy
Actions: Hearing before the Committee on Banking,
Housing, and Urban Affairs S Hr’g No 103-901
(May 27) Washington, D.C.: U.S Government
Print-ing Office.
U.S Senate 1995 Federal Reserve’s First Monetary Policy
Report for 1995: Hearing before the Committee on
Banking, Housing, and Urban Affairs S Hr’g
No.104-62 (February 22) Washington, D.C.: U.S Government
Printing Office.
CROSS REFERENCES
Bank of the United States; Banks and Banking;
Glass-Steagall Act.
FEDERAL RULES DECISION®
A reporter that reprints decisions rendered by federal district courts that interpret or apply the Federal Rules of Civil, Criminal, and Appellate Procedure and also the Federal Rules of Evidence
The full-text decisions that appear in the Federal Rules Decisions, commonly abbreviated F.R.D., are not published in the FEDERAL SUPPLEMENT
FEDERAL RULES OF EVIDENCE The Federal Rules of Evidence generally govern civil and criminal proceedings in the courts of the United States and proceedings before U.S bank-ruptcy judges and U.S magistrates, to the extent and with the exceptions stated in the rules
Promulgated by the U.S Supreme Court and amended by Congress from time to time, the Federal Rules of Evidence are considered legislative enactments that have the force of statute, and courts interpret them as they would any other statute, employing traditional tools of statutory construction in applying their provisions
The rules are designed to secure fairness in JUDICIAL ADMINISTRATION, to eliminate unjustifi-able expense and delay, and to promote the growth and development of the law of evidence
so that truth may be ascertained and pro-ceedings justly resolved Huff v White Motor Corporation, 609 F.2d 286 (7th Cir Ind 1979)
But the rules are not intended to result in an exhaustive search for a total and complete understanding of every civil and criminal case that comes before a federal court Rather, the rules are meant to assist lawyer-adversaries and common sense triers-of-fact in resolving particularized legal disputes Accordingly, the rules give courts authority to adapt the laws of evidence to circumstances as they arise
The Federal Rules of Evidence were adopted
by order of the Supreme Court on November
20, 1972, transmitted to Congress by Chief Justice WARREN E BURGERon February 5, 1973, and became effective on July 1, 1973 In enact-ing these rules, the Supreme Court and Con-gress did not intend to wipe out years of COMMON LAW development in the field of evidence To the contrary, the Federal Rules
of Evidence largely incorporate the judge-made, common law evidentiary rules in existence at the time of their ADOPTION, and where the federal rules contain gaps or omissions, courts
FEDERAL RULES OF EVIDENCE 387
Trang 10may answer unresolved questions by relying on common law precedent Like their common law predecessors, the federal rules govern the overall admissibility of evidence, the limitations of relevant evidence, the definition of prejudicial and CUMULATIVE EVIDENCE, the admissibility of hearsay, lay andEXPERT TESTIMONY, the nature of evidentiary presumptions, the grounds for authentication and identification of DOCUME-NTARY EVIDENCE, and the scope of evidentiary privileges, like the work product, attorney-client, and doctor-patient privileges
The Federal Rules of Evidence apply to (1) the U.S district courts, including the federal district court in Washington, D.C.; (2) the fede-ral district courts located in Puerto Rico, Guam, the Virgin Islands, and the Northern Mariana Islands; (3) theU.S.COURTS OF APPEALS; (4) the U.S
Claims Court; (5) U.S BANKRUPTCY courts and U.S magistrates Although the rules do not specify whether they apply to the U.S Supreme Court, that Court has applied the rules as if they
do Pursuant toEXECUTIVE ORDER, military courts-martial are required to apply rules of evidence that substantially conform to the Federal Rules of Evidence Executive Order No 12473 However, the Federal Rules of Evidence do not generally apply to administrative agencies
The Federal Rules of Evidence apply to most civil actions, including admiralty and maritime cases, to most criminal proceedings, and to contempt proceedings, except contempt pro-ceedings in which the court may act summarily
But the rules do not apply to criminal pro-ceedings to issue an ARREST WARRANT, a SEARCH WARRANT, or a SUMMONS, to preliminary exam-inations in criminal cases, such as hearings on motions toSUPPRESSevidence, to proceedings for EXTRADITION or rendition, to SENTENCING hear-ings, to probation hearhear-ings, or to hearings to set bail FRE Rule 1101
Nor do the Federal Rules of Evidence generally apply in GRAND JURY proceedings A grand jury may compel the production of evidence or the testimony of WITNESSES as the grand jury considers appropriate, and its operation generally is unrestrained by technical, procedural, and evidentiary rules governing the conduct of criminal trials However, the rules governing privileges generally do apply at grand jury proceedings, and thus grand-jury witnesses may refuse to disclose information on the
grounds that it is protected byATTORNEY-CLIENT PRIVILEGE, for example
In some instances the Federal Rules of Evidence apply only to the extent that they have not been superseded by statute or other Supreme Court rules governing certain proceedings in particular areas of law For example, the Federal Rules of Evidence do not fully apply to the trial of misdemeanors and other petty offenses before U
S magistrates, to the review of orders by the Secretary of Agriculture under the Perishable Agricultural Commodities Act of 1930 (7 U.S.C.A 499f, 499g), toNATURALIZATIONproceedings under theIMMIGRATIONand Nationality Act (8 U.S.C.A 1421-1429), to prize proceedings in admiralty under 10 U.S.C.A sections 7651-7681, or to proceedings reviewing the orders of the Secretary
of the Interior under 15 U.S.C.A 522
In 1974 the National Conference of Com-missioners on Uniform State Laws adopted the Uniform Rules of Evidence, which were designed
to be identical to the Federal Rules of Evidence Cases interpreting the Federal Rules of Evidence are helpful in the analysis of state rules that are based on the Federal Rules of Evidence In fact, some jurisdictions have held that a rule of evidence patterned after a Federal Rule of Evidence should be construed in accordance with federal court decisions interpreting the federal rule Thus, state courts in these jurisdic-tions will look at the federal rule’s history and purposes in interpreting the provisions of an identical state rule of evidence However, at least one state court has held that because rules of evidence, to the extent that they do not impinge upon U.S constitutional guarantees, are a matter
of state law, federal decisions interpreting the federal rules are not of controlling precedential significance State v Outlaw, 108 Wis.2d 112, 321 N.W.2d 145 (Wis., Jul 02, 1982)
FURTHER READINGS Bocchino, Anthony J., and David A Sonenshein 2003 Federal Rules of Evidence with Objections South Bend, IN: National Institute for Trial Advocacy.
Johnson, Lori A 2003 “Creating Rules of Procedure for Federal Courts: Administrative Prerogative or Legisla-tive Policymaking ” The Justice System Journal 24 (winter).
Kraut, Jayson, et al, eds 1983 American Jurisprudence Rochester, NY: Lawyers Cooperative.
CROSS REFERENCES Burger, Warren Earl; Grand Jury.
388 FEDERAL RULES OF EVIDENCE