Crisis, continuity and learning: The institutional origins of subprime management at the Federal Reserve

Abstract

This article examines the nature of the US central bank's relationship to financial markets amidst recent arguments that the subprime crisis marked a paradigmatic shift in the Federal Reserve's approach to financial management. It applies the concepts of institutional capacity and institutional learning from neo-institutionalist scholarship on policy development to examine the Federal Reserve's response and reaction to various financial failures following 1970. On this basis the paper argues that the Federal Reserve's response to the 2008 crisis drew on the institutional learning it garnered in previous periods.