Financial Crisis Inquiry Commission
Preliminary Staff Report
THE ROLE OF THE FEDERAL RESERVE IN BANKING SUPERVISION AND REGULATION
APRIL 7, 2010
This preliminary staff report is submitted to the Financial Crisis Inquiry Commission (FCIC) and the public for information, review, and comment. Comments can be submitted through the FCIC’s website, www.fcic.gov.
This document has not been approved by the Commission.
The report provides background factual information to the Commission on subject matters that are the focus of the FCIC’s public hearings on April 7, 8, and 9, 2010. In particular, this report provides information on the Federal Reserve and its regulation of the financial system, including its regulation of mortgage markets. Staff will provide investigative findings as well as additional information on these subject matters to the Commission over the course of the FCIC’s tenure.
The purpose of this preliminary staff report is to provide a brief overview of the role of the Federal Reserve in banking supervision and regulation. The first section describes the structure of the Federal Reserve and the extent of the Federal Reserve’s supervisory role as it stood at the beginning of the financial crisis. Section II describes the history of banking supervision and regulation in the United States, with a focus on the deregulatory environment that prevailed in the 1990s and early 2000s. Section III describes the Federal Reserve’s approach to systemic risk in the recent period. Section IV discusses Federal Reserve supervision of mortgage lending activity.
