Tuesday, October 14, 2014

The Fed's "Doomsday Book"

Over at the Wall Street Journal’s blog, Damian Paletta reports the existence of  “a compendium of legal opinions, in some cases stretching back decades, that explore the legal limits of the Federal Reserve in the event of a financial crisis."  In what I take to be a pun on the great medieval document, the Fed lawyers refer to the "big, fat binder” as “the Doomsday Book.”  During a trial growing out of the federal government's bailout of AIG, David Boies read from its first page a description of the binder as "a collection of emergency documentation and memoranda compiled by the Legal Department of the Federal Reserve Bank of New York.”

Of special note is a legal memorandum written by Howard H. Hackley, formerly general counsel of the Fed's Board of Governors.  A subsequently written document in the binder calls the Hackley memo “probably the most important historical document in the collection: a piece of original legal scholarship” that includes "an extensive legal history of Federal Reserve lending activities.”

Update: More, from the New York Times.