Guarantor of Last Resort

Caught between Frontstage and Backstage: The Failure of the Federal Reserve to Halt Rule Evasion in the Financial Crisis of 1974

“…This article suggests that it is also important to consider how institutions could be changed so that crises, if they happen, are more likely to lead to reform. Judge's (2019) proposal to establish an Emergency Guarantee Authority is promising in this respect. It would extend the crisis-management tools available to regulators but tie their use to reporting requirements and trigger a reform process involving Congress.…”

“…It would extend the crisis-management tools available to regulators but tie their use to reporting requirements and trigger a reform process involving Congress. This mechanism “would provide financial regulators the tool they need to contain a growing financial crisis while also institutionalizing constraints to ensure that they remain motivated to address the problems underlying a panic” (Judge 2019:711). Future work in this vein promises to rearrange frontstage and backstage during crises so as to make it more likely that rule evasion is brought under control.…”