elizabeth a duke : come with me to the federal open market committee ( fomc ) speech by elizabeth a duke, member of the board of governors of the federal reserve system, at the money marketeers of new york university, new york, 19 october 2010. * * * thank you for inviting me to be here and to help you fulfill one of the money marketeers ’ key objectives, “ to enhance knowledge and understanding of the financial marketplace. ” i was a banker for more than 30 years before becoming a member of the board of governors, so i ’ ve spent my career trying to deepen my own knowledge and understanding of the financial marketplace. in particular, because the outlook for interest rates and the economy was so important to my bank and my customers, i spent considerable effort trying to understand the federal open market committee ( fomc ), the fed ’ s primary monetary policymaking body, and trying to anticipate the decisions coming out of individual fomc meetings. in fact, the first bank investment class i ever took included instruction on how to use the weekly reports of monetary aggregates to decipher fed actions. that will give you some idea of how long ago that was : it was before the committee began expressing its objective in terms of the federal funds rate – actually before the committee began saying much at all. now, after two years of participating in the decisionmaking process, i would like to share some observations that i believe might help you better understand the formulation of monetary policy. before i joined the board, i was advised to read two speeches, “ come with me to the fomc ” given by governor laurence meyer in 1998, and an updated version presented by governor mark olson in 2004. 1 it turns out that governor meyer ’ s speech was inspired by one given in 1967 by edward wayne, the president of the federal reserve bank of richmond. as i thought about how to frame this discussion, a reprise of these earlier speeches seemed appropriate. in some ways there has been little change since the first edition of the “ come with me ” speech was given more than four decades ago : members of the board of governors and presidents of the 12 reserve banks still meet regularly in washington, d. c., to discuss how best to set monetary policy to foster full employment and stable prices. but the ways in which these policymakers think and talk about the economic outlook, the formulation of monetary policy, and the communication of that policy have all changed dramatically, especially lately

speech delivered to the committee for the republic, washington, d. c., january 16, which sets forth a proposal to limit banks to traditional commercial banking activities, restrict access to the federal safety net to banks, and require affiliates of a bank to disclose to their customers that they are outside the federal safety net. see joseph noss and rhiannon sowerbutts ( 2012 ), “ the implicit subsidy of banks ( pdf ), ” bank of england financial stability paper no. 15. bis central bankers ’ speeches conclusion today, few ideas can be less controversial than ending too big to fail. the question is “ how? ”, and there are differing opinions on that. in titles i and ii of dodd - frank, congress has given the regulators a game plan for ending too big to fail. the regulators, including the federal reserve, are forcefully implementing the plan we have been given. my own view is that the framework of current reforms is promising, and should be given time to work. in any case, too big to fail must end, even if more intrusive measures prove necessary in the end. thank you very much. bis central bankers ’ speeches