It's a classic power vacuum. Congress has proven unable to deal with banking issues, partly because it is deadlocked politically and partly because of the golde

It's a classic power vacuum. Congress has proven unable to deal with banking issues, partly because it is deadlocked politically and partly because of the golden handcuffs of Wall Street political contributions. The speculation and lack of oversight that led to the crash in 2008 continue unabated. The charter of the Fed is to maximize employment, minimize inflation and keep interest rates steady. The classical tool of the Fed is controlling the supply of money; simplistically, expanding the money supply through reduced interest rates and direct loans to stimulate the economy (and employment) and shrinking it when the resulting boom begins to cause inflation. But since 2008 the economy has not reacted to reduced interest rates and banks that are loan recipients have been reluctant to increase the availability of loans to the real economy, the part that produces goods and services, but eager to use the money to (further) speculate in financial instruments. Thus, the money supply is not reaching its intended targets and has little effect on real GDP or employment. In the absence of effective fiscal regulation from the Congress or executive with which it might work in concert, the Fed has sought to exercise more direct control of the banks. The alternative is to be powerless to carry out their mandate and join the legion of neutered financial regulators, who cross their fingers and hope against reason or precedent that the banks won't screw up again.