Meltzer on the Fed as Regulator

Allan Meltzer, the prominent economist and historian of the Federal Reserve System, writes:

In its 95-year history, the Fed has never made a clear statement of its policy for dealing with failures.... So what can taxpayers expect from an increase in the Fed's discretionary authority over investment banks? The likely answer is rescues, delays and lax supervision -- followed by taxpayer-financed bailouts. Throughout its postwar history, the Fed has responded to the interests of large banks and Congress, not the public.