School of Law Seminar: Extraordinary Actions: The U.S. Federal Reserve and the U.S. Financial Crisis

When?

Monday 28 March 2011, 13:00 to 14:00

Where?

14MS01

Open to:

Public, Staff, Students

Speaker:

Professor Christian Johnson (University of Utah, USA)

ABSTRACT
The U.S. Federal Reserve committed hundreds of billions of dollars in unprecedented lending activities and purchases of mortgage-backed securities based upon its authority under the Federal Reserve Act, and particularly upon its interpretation of Section 13(3), a formerly untested and unused clause in the Federal Reserve Act. Such efforts effectively doubled the size of the Federal Reserve’s balance sheet. This expansion of authority exercised by the Federal Reserve not only has significance in today's financial crisis but also sets a precedent for future Federal Reserve actions. The Federal Reserve has relied on Section 13(3) to authorize its controversial lending actions with respect to Bear Stearns, AIG, Citigroup and Bank of America. It also relied on Section 13(3) to create various liquidity programs such as the Term Asset-Backed Securities Loan Facility and the Commercial Paper Funding Facility. The Federal Reserve also greatly expanded its traditional lending to financial institutions and central banks through the creation of the Term Auction Facility and Central Bank Swap Facility. Finally, in an effort to stabilize the residential real estate market, the Federal Reserve has purchased over $1 trillion of mortgage-backed securities through the Federal Reserve’s MBS purchase program. This presentation will analyze these actions and discusses their current and future implications.

SPEAKER BIOGRAPHY:

Christian Johnson is a professor of law at The University of Utah College of Law. Prior to joining The University of Utah faculty two years ago, he spent 13 years at Loyola University Chicago School of Law and was an academic consultant at the Federal Reserve Bank of Chicago. Professor Johnson has taught law school courses on banking, finance, and tax, publishing 4 books and over 40 articles on these topics. Professor Johnson has spoken on the financial crisis, finance and derivatives at such institutions as the IMF, the American Bar Association, the Futures Industry Association, the Federal Reserve Bank of Chicago as well as lecturing at the University of Melbourne, Monash Law School, Osgoode Law School, and the University of Hong Kong. Professor Johnson also testified for the U.S. Congress on financial reform.

Prior to teaching law school, Professor Johnson was an associate for Milbank, Tweed, Hadley & McCloy in New York and Mayer, Brown, Rowe & Maw in Chicago, and prior to attending law school, he was a CPA for Price Waterhouse.

Professor Johnson graduated magna cum laude with a B.A. in Accounting from the University of Utah and received a Masters of Accounting from the University of Utah Graduate School of Accounting. Professor Johnson received his J.D. from Columbia Law School where he was the executive editor of the Columbia Law Review and a Harlan Fiske Stone Scholar.