Washington, D.C. — Today, the Center for American Progress released a new report that identifies four steps that the Federal Reserve can take to make the economic recovery from the COVID-19 crisis more transparent, accountable, and equitable.
Following the Great Recession, the Fed’s rescue of financial firms was often criticized as a cost-free bailout for the very entities that caused that crisis. The root causes of the current economic crisis are very different, and the Fed’s broader rescue effort is critical to helping the economy recover. But changes to the operation of the rescue are required to make it fair and equitable for all taxpayers.
Credit to private parties must be conditioned on worker and taxpayer protections.
Potential conflicts of interest must be addressed.
Facility operations must be fully and contemporaneously transparent.
Accountability for the structure, operation, and outcomes of the rescue must be stronger and contemporaneous.
“Over the past several months, the Fed has played an essential role in buttressing the economy,” said Marc Jarsulic, chief economist at CAP and co-author of the report. “But if the Fed is going to promote an inclusive and equitable economic recovery, its rescue program needs to be reformed to better protect taxpayers who are assuming the risks involved and to allow full transparency and accountability.”
Read the report: “Making the Fed Rescue Serve Everyone in the Aftermath of the Coronavirus Pandemic” by Marc Jarsulic and Gregg Gelzinis