What Is in the Federal Reserve’s Doomsday Book?
The Doomsday Book is a collection of documents and memoranda compiled by the legal department of the Federal Reserve Bank of New York (FRBNY).
The Doomsday Book is a collection of documents and memoranda compiled by the legal department of the Federal Reserve Bank of New York (FRBNY). The book focuses on financial crises that have prompted an operational response such as emergency loans and payments. The book includes background material that is useful in responding to a financial crisis and can help central bankers plan for emergencies. Further, it is meant to save time during the crisis.
Contents of the Doomsday Book have not been available to the public. However, I obtained access to the book through the FRBNY’s freedom of information policy. This paper discloses the book’s contents, showing that there has been a long and continuous disagreement between the FRBNY’s legal department and the board of governors of the Federal Reserve System with respect to the interpretation of the Fed’s incidental powers.
Lack of Transparency about the Contents of the Doomsday Book
The book is intended to help the FRBNY’s lawyers assist their clients in emergency management, as the FRBNY is considered the central bank’s “firefighting department” during a financial crisis. There is no comparable “doomsday book” in Washington, D.C., or any other regional Reserve Bank. The book is maintained in paper and digital disk versions and is revised periodically. The editor (the FRBNY’s general counsel) is the gatekeeper for all additions and revisions to the book.
Emre Kuvvet is a professor of finance at Nova Southeastern University.
Washington, D.C., or any other regional Reserve Bank. The book is maintained in paper and digital disk versions and is revised periodically. The editor (the FRBNY’s general counsel) is the gatekeeper for all additions and revisions to the book.
Although the Doomsday Book has existed in various forms since the early 1990s, the public first heard about it in 2014 during the Starr International Company, Inc. v. United States trial.1 In that trial, a class of former equity investors in the American International Group (AIG) sued the government over the terms of its bailout of AIG. The investors claimed that some of the memoranda in the Doomsday Book showed that the Fed broke its own rules and ignored the legal opinions in the book by taking a 79.9 percent equity stake in AIG in the fall of 2008. Further, the plaintiffs argued that the Fed lacked the authority to take an equity stake in the company.
During the trial, the Fed tried hard to keep the Doomsday Book under the court seal so that it could not be released to the public, but portions of the book were leaked in testimonies, as the book was considered evidence in the trial. John S. Kiernan, the FRBNY’s lawyer, told the U.S. Court of Federal Claims that “of the tens of thousands of documents that we have produced in this case, the Federal Reserve Bank of New York has sought to retain confidentiality because of the internal sensitivity of only this one.” He told the judge that the book was “confidential, proprietary and important” (Appelbaum 2015).
The book has been used for its intended purposes on many occasions. For instance, Timothy F. Geithner, who led the FRBNY during the Great Recession of 2008, indicated in the trial that he kept the Doomsday Book in his office. During his testimony, he stated, “We did occasionally go back and consult it as things were eroding around us.... It was a reference material that described precedent and authority” (Paletta 2014).
In his 2014 memoir, Stress Test: Reflections on Financial Crises, Geithner acknowledged the Doomsday Book’s help in saving Bear Stearns from bankruptcy for several vital days when the FRBNY lent money to J. P. Morgan Chase, which then lent the money to Bear Stearns. He wrote in his memoir that the idea came from Thomas C. Baxter Jr., “taking a page from the Doomsday Book, the binder full of information about the New York Fed’s emergency powers that he had helped write years earlier” (Geithner 2014, 151).
During an interview, Baxter, the FRBNY’s general counsel during the recession of 2008, described how the book could be helpful:
Whether you call it a “doomsday book” or just a crisis playbook, knowing what types of interventions have been used, and could be used, in a crisis before the crisis happens is a very useful resource. Before the 2007 crisis, we at the Fed had thought through how we would respond to various scenarios and had defined disciplines for implementing such responses. We drew from our experiences after the 1987 market crash, then the LongTerm Capital Management in 1998 near-failure, and the September 11th turmoil, when the stock market was closed for days. We memorialized the actions we took and then we went through a series of “war games” to simulate what we would do in certain situations. I think this type of exercise is a really useful thing for people in central banking who are charged with the responsibility for maintaining financial stability. It’s important to think through the what-ifs, put them down on paper, and try them out, before you get yourself into a situation where you have to respond. (Buchholtz and Wiggins 2019, 202)
Disclosing the Doomsday Book’s contents and details could contribute to the Federal Reserve System’s progress toward transparency. Alan S. Blinder (2004), who served as the Fed’s vice chairman from 1994 to 1996, suggested that one of the greatest revolutions in central banking during the previous fifteen years was the shift toward transparency. Similarly, Ben S. Bernanke (2010), then chairman of the Fed, said the following about the central bank’s transparency during a speech: “Central bank independence is essential, but, as I have noted, it cannot be unconditional. Democratic principles demand that, as an agent of the government, a central bank must be accountable in the pursuit of its mandated goals, responsive to the public and its elected representatives, and transparent in its policies.”
A disclosure of the book’s contents and details can help the public and legislators learn what the Fed thinks about the limits of its powers to avert a financial crisis. If the public and legislators find the Fed’s legal interpretations of certain laws indefensible, they can pressure it to accept relatively strict interpretations of those laws. The public can also exert pressure on Congress to revise laws, as it did with the Dodd-Frank Act following public outrage over FRBNY’s actions involving Bear Stearns and AIG. This could be one benefit of transparency, while another benefit of making the book available publicly is that it includes a wealth of information. Not only is it a blueprint for fighting financial crises, but it also includes archives and an oral history of the Fed employees during various crisis periods. These are primary source materials that are likely to be of research interest. Economists, historians, and lawyers whose area of research is the Fed and central banking can benefit greatly from this never before unveiled resource.
On May 23, 2022, I requested access to the Doomsday Book under the FRBNY’s freedom of information policy.2 The FRBNY’s website states that the bank does not fall under the category of an agency as defined by the Freedom of Information Act (FOIA). Consequently, it is not bound by FOIA’s provisions. It still complies with the act’s spirit when responding to such types of requests, however.3 The FRBNY provided me with versions 4.1 (2006) and 5.0 (2012) of the book.
There are five versions of the Doomsday Book, which has existed in various forms since the early 1990s. The revision history goes back to 1997. In this paper, I focus primarily on the latest version (5.0), as it was updated heavily after the DoddFrank Wall Street Reform and Consumer Protection Act of 2010.
Contents of the Doomsday Book
The first part of the book contains pre-2008 legal documents, such as emergency credit agreements and emergency payment agreements. The second consists of post2008 legal documents and was created in response to the 2008 recession. It includes every facility that the FRBNY employed to fight the recession. The third contains the most interesting section, Powers Opinions. Powers Opinions discusses the Federal Reserve Banks’ authority to provide various forms of emergency services and facilities that it is not in the practice of offering under normal conditions. Further, Powers Opinions discusses the legality of exercising such emergency powers and thus answers the question, “Can the FRBNY do this?” It is worth noting that Powers Opinions does not address the legal criteria for determining a situation to be a financial emergency. The book does not provide a clear definition of the degree of abnormality required to classify circumstances as exigent. This lack of specificity may be intentional, allowing the FRBNY the flexibility to designate any situation as abnormal.
Later in this article, I provide a comprehensive analysis of the areas where the perspective on the Fed’s authority in the Doomsday Book diverges from the views held by the Federal Reserve board of governors and possibly exceeds the standards set by Congress. Within this section, I explore how differing interpretations of the legal authority of the Fed between the FRBNY and the board shape their respective perceptions regarding the extent of the Fed’s authority in financial crises. I demonstrate how these differing perspectives can lead to disagreements on which actions are the most suitable to address such crises. Notably, I highlight the proactive approach typically adopted by the FRBNY during emergencies, while the board tends to exercise greater caution. Additionally, I illustrate how the board, despite initial reluctance, eventually yields to the legal arguments presented by the FRBNY regarding the Fed’s authority in financial crises. This section also includes compelling examples that showcase how the FRBNY establishes the legitimacy of the Fed’s authority without necessitating explicit approval from Congress.
In this section of the paper, I summarize the contents of the Doomsday Book’s three volumes. The next section offers a discussion on the legal authority of the Fed. The final section draws conclusions.
Volume 1: Pre-2008 Legal Documents
Volume 1 consists of pre-2008 legal documents, such as emergency credit agreements and emergency payment agreements, documents that either the FRBNY created or were taken from public sources. Some of the agreements are copies of model agreements from public sources such as the International Swaps and Derivatives Association, the Bond Market Association (later merged with the Securities Industry Association to form the Securities Industry and Financial Markets Association), and the New York Fed–sponsored Financial Market Lawyers Group.
Volume 1 includes eight main sections:
Emergency Credit Agreements
Emergency Payment Agreements
Master Agreements
Nonrecourse Loan Agreements
Closing of a Branch or Agency
Ancillary Agreements
Public Statements
Litigation
The Emergency Credit Agreements section has seven subsections:
Section 13(3) Lending Agreements with Recourse
International Swap Agreements
Section 10B Lending Agreement
Section 13(13) Lending Agreement
Repo Agreement
Sale of Foreign Exchange (FX) Book
Federal Deposit Insurance Corporation (FDIC) Indemnity Agreement
The Section 13(3) Lending Agreements with Recourse subsection4 covers longform and short-form agreements. The FRBNY considers that section 13(3) credit can be extended to “individuals, partnerships, and corporations.” The FRBNY believes that section 13(3) is the only means through which Discount Window credit can be extended to nonbanks without limitations on the type of collateral and, thus, the residual emergency lending authority.
The International Swap Agreements subsection consists of four agreements: foreign central bank swaps, the dollar-pound swap agreement; the U.S./Canadian dollar swap agreement, and the medium-term exchange stabilization agreement.
The FRBNY considers that section 14 of the Federal Reserve Act empowers Reserve Banks to purchase and sell “cable transfers...in the open market, at home or abroad, either from or to domestic or foreign banks, firms, corporations, or individuals.” The FRBNY believes that as cable transfers include forward and spot foreign exchange transactions, that section authorizes “swap agreements” with foreign central banks.
The Foreign Central Bank Swaps package is a folder in which many of the agreements were drafted in 2011. The agreements are all similar: the central bank counterparties are the European Central Bank (ECB) and the central banks (or monetary authorities) of Australia, Brazil, Canada, Denmark, England, Japan, Korea, Mexico, New Zealand, Norway, Singapore, Sweden, and Switzerland. There are three older sample agreements drafted before the package. Two are the dollar-pound swap agreement and U.S./Canadian dollar swap agreement with the Bank of England and Bank of Canada that emerged from the September 11 operation event. The mediumterm exchange stabilization agreement was a 1995 swap with Mexican entities, while the dollar-pound swap and U.S./Canadian dollar swap were straight liquidity deals among central banks. The medium-term exchange stabilization swap involved sovereign credit and used the central banks as a fiscal agent.
The Operating Circular subsection in Section 10B Lending Agreement consists of 1998 operating circular 10 and 2006 operating circular 10. Operating circular 10 contains the writing needed for any type of secured lending and is a template for lending needs that other documents in the book do not satisfy. The Doomsday Book contains both the 1998 and 2006 versions of operation circular 10, as some banks (small ones) have not yet adopted the 2006 version.
In the Section 13(13) Lending Agreement subsection, the FRBNY states that the section 13(13) lending authority can be useful for nonbank government securities dealers. The FRBNY believes that Federal Reserve Banks are authorized to accept ineligible collateral to supplement eligible collateral.
The Repo Agreement subsection includes a revised version of the Public Securities Association (PSA) master repurchase agreement from September 1996. The FRBNY argues that although there is little doubt about the FRBNY’s authority to enter into such an agreement, a particular transaction’s source of authority may be unclear. The FRBNY believes that a purchase of securities followed by a resale can be authorized by section 10B, 13(13), or 14 of the Federal Reserve Act. The FRBNY considers that the sale of securities followed by a repurchase is authorized under section 14. However, it believes that such a transaction may also be characterized as securities lending against cash collateral, likely authorized by sections 10B or 13(13).
The Sales of FX Book subsection contains an agreement that was derived from the Franklin agreement of 1974 and modified in 1991 in contemplation of the Bank of New England insolvency.
The FDIC Indemnity Agreement subsection includes an agreement that streamlines the insolvency process. The agreement allows the FDIC to pay up to the fair market value of a Reserve Bank’s collateral to the bank in exchange for a release of collateral. As part of the payment, the Reserve Bank has a right of indemnification for future losses up to the difference between the fair market value and the FDIC’s previous payments to the bank. This agreement simplifies the interactions between the FDIC and the Reserve Bank if the latter is overcollateralized securely.
Volume 1’s second main section includes Emergency Payment Agreements and has two subsections:
The Section 13(3) Account Agreement.
FX Delivery versus Payment (DVP) Agreement.
The Section 13(3) Account Agreement was prepared in March 1999. If the FRBNY extends emergency credit to a nonbank, the latter can have a direct account relationship with the FRBNY using that agreement.
The FX DVP Agreement is an emergency agreement that envisions one party with doubtful credit, a group of counterparties of the party, and a discrete number of currencies. In the agreement, the FRBNY would work only with a discrete number of participants who would serve as principals in the transaction and affect the counterparties’ trades with the party with doubtful credit. The FRBNY serves as the escrow agent and interposes itself between the participants and the party with doubtful credit. As the escrow agent, the FRBNY would not release funds to either party until both parties have funded it.
The third main section of volume 1 is Master Agreements, which trade associations and the FRBNY-sponsored committee disseminate openly. Master Agreements includes nine subsections:
The Bond Market Association (BMA) Master Repurchase Agreement
FX Committee International Currency Options Market Master Agreement (ICOM)
FX Committee International Foreign Exchange and Options Master Agreement (FEOMA)
Barrier Option Confirmations for FEOMA and ICOM
FX Committee’s International Foreign Exchange Master Agreement (IFEMA)
International Swaps and Derivatives Association (ISDA) Documentation
FRBNY Master Open Market Agreement
BMA Master Securities Loan Agreement
FRBNY Global Master Repurchase.
Volume 1’s fourth main section contains Nonrecourse Loan Agreements and is intended for asset purchases.
The fifth main section of volume 1 is Closing of a Branch or Agency and has two subsections:
Custody Agreement
Deposit and Pledge Agreement
The documents in that section derived from the closing of the Daiwa Bank Ltd. branch in February 1996. The FRBNY considers that contingent liabilities are a key problem when closing a foreign branch or agency, and the documents address some of those concerns.
Volume 1’s sixth main section is Ancillary Agreements and includes six subsections:
Blank Uniform Commercial Code (UCC)-1
Promissory Note
Intangible Collateral Agreements
Guarantees
Treasury Fiscal Agent Letter of Indemnity
Buddy Bank Materials
The Promissory Note subsection includes a simple promissory note for possible use in section 10B or 13(3) lending.
The Intangible Collateral Agreements subsection includes documents that seek to grant a perfected blanket-style security interest in all intangibles, such as accounts receivable, qualified financial contracts (swaps, forwards, FX, other derivatives), loans, securities, and bank accounts.
The Guarantee Agreements subsection consists of the following four components:
Model Parent Guarantee
Operating Circular (OC)-10 Letter of Agreement to Secure Guarantee
Model Subsidiary Guarantee
User’s Guide to Guarantees
The model parental guarantee mitigates risks that interaffiliate transactions pose. That guarantee consists of a conditional promise to pay, coupled with a secu- rity agreement on parental assets that supports the guarantee. The OC-10 letter of agreement to secure a guarantee secures the model guarantee with the guarantor’s assets. The model subsidiary guarantee serves the same function as the model parent guarantee except that it applies to a bank’s subsidiaries. The user’s guide to guaran- tees is retained in the agreement section, although it is a memorandum.
The Treasury Fiscal Agent Letter of Indemnity subsection is the letter that derives from a late 1997 letter from Treasury indemnifying the FRBNY for its fiscal
agency work with respect to Nazi gold claims. It is kept in the Doomsday Book in case the indemnity language may be useful in future emergency fiscal agency functions.
The Buddy Bank Materials subsection includes four documents. When a Reserve Bank becomes unable to extend discount window credit, the buddy bank documentation ensures that other Reserve Banks can serve as agents for the incapac- itated Reserve Bank.
The seventh main section of volume 1 is Public Statements, with six subsections:
Foreign Exchange Committee, Y2K: Best Practice in the Foreign Exchange Market
New York Bank Holiday
Section 13(3) Resolution by Board of Governors
Emergency Lending Resolution by Board of Directors
Book-Entry Securities Resolution
Request for Section 13(3) Authority
The Foreign Exchange Committee, Y2K document was prepared to address year 2000 (Y2K) problems in operational failures that might trigger closeout provisions in foreign exchange contracts.
The New York Bank Holiday proclamation was drafted originally in August 1990 in response to the Con Ed power failure.
The Section 13(3) Resolution by Board of Governors was taken from the orig- inal November 1988 section 13(3) draft lending agreement, which was modified slightly in 1997 and again in 2004. The FRBNY states that the board need not disclose such a resolution publicly.
The provenance of the Emergency Lending Resolution by Board of Directors is the same as that of the 13(3) resolution. The determination in that resolution is required by Regulation A for emergency lending under either sections 13(3) or 13(13) of the Federal Reserve Act.6 The language of the document is drafted for section 13(3) lending.
The Book-Entry Securities Resolution was drafted in 1992 in response to the Salomon crisis. The secretary of the treasury’s authority to permit the FRBNY to create a securities account for a nonbank is pursuant to section 15 of the Federal Reserve Act. The resolution was revised in 1997 to clarify and strengthen the secretary of the treasury’s authority.
The Request for Section 13(3) Authority document was taken from the Federal Reserve Bank of Kansas City.
Volume1’s seventh main section is titled Litigation. The memorandum of law in that section is designed for one problem, an intraday attachment of the Clearing House Interbank Payments Systems (CHIPS) account with the FRBNY.
Volume 2: Post-2008 Legal Documents
Volume 2 of the Doomsday Book consists of post-2008 legal documents. Volume 2 was created in response to the 2008 recession and includes all facilities that the FRBNY employed to fight the recession except the Term Auction Facility (TAF).
Volume 2 includes eleven main sections:
Maiden Lane I
Maiden Lane II
Maiden Lane III
AIG Lending Agreement
Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF)
Commercial Paper Funding Facility (CPFF)
International Lease Finance Corporation (ILFC)
Money Market Investor Funding Facility (MMIFF)
Primary Dealer Credit Facility (PDCF)
Term Asset-Backed Securities Loan (TALF)
Term Securities Lending Facility (TSLF)
With one exception, all of these documents take the form of folders, each of which contains many separate documents.
Volume 2’s first section is Maiden Lane I. The documentation was prepared on the FRBNY’s behalf. The parties (and capacities) included the FRBNY (controlling party, tranche A lender), Maiden Lane LLC (borrower), J. P. Morgan Chase & Co. (tranche B lender), State Street Bank & Trust Co. (collateral administrator), and BlackRock Financial Management Inc. (investment manager).
The second section of volume 2 is Maiden Lane II, the documentation in which the FRBNY prepared. That transaction was comparable in principle and structure to that of Maiden Lane I.
Volume 2’s third section is Maiden Lane III, the documentation in which was prepared on the FRBNY’s behalf. The LLC bought reference assets from banks upon payment of the notional value. Then, the banks released AIG’s derivatives sub- sidiary from the associated credit default swaps, which hedged the banks from the reference assets’ downside risk. AIG compensated the FRBNY with the LLC’s sub- ordinated funding, and AIG and the FRBNY divided the LLC’s residual share after asset liquidation.
The fourth section of volume 2, AIG Lending Agreement, was prepared on the FRBNY’s behalf as well. The agreement was designed as a secured loan from the FRBNY to AIG.
The fifth section of volume 2 is about the AMLF. The Doomsday Book does not include its documentation, which the Federal Reserve Bank of Boston prepared.
Volume 2’s sixth section covers the CPFF, the documentation of which was pre- pared on the FRBNY’s behalf. The CPFF was a FRBNY-funded LLC that bought commercial paper directly from issuers through commercial paper dealers at a spread of 200 basis points to the overnight index swap rate for unsecured commercial paper and 300 basis points for asset-backed commercial paper. The 200-point spread was divided into a 100-point spread for credit risk and an additional 100 points that could be waived if the issuer offered sufficiently improved credit.
The seventh section of volume 2 covers the ILFC, the documentation of which was prepared on the FRBNY’s behalf. It is associated closely with the AIG lending agreement.
The eighth section of volume 2 discusses the MMIFF, which was created as a liquidity backstop for money market mutual funds.
Volume 2’s ninth section covers the PDCF, for which the documentation was prepared in-house by the FRBNY’s legal department and the clearing banks. It is a tri-party repo under section 13(3) authority in which the FRBNY acts as lender, the primary dealers as borrowers, and the clearing banks as tri-party intermediaries. The tenth section of volume 2 covers the TALF, the documentation for which several law firms prepared on the FRBNY’s behalf. The TALF is a nonrecourse financing structure for asset-backed securities to provide credit support and liquidity to this asset class.
The eleventh subsection of volume 2 discusses the TSLF, the documentation for which the FRBNY’s legal department prepared in-house. The program lent Trea- sury general collateral against mortgage securities, and was a repo program that accepted mortgage securities as collateral.
Volume 3: Legal Memoranda
Volume 3 of the Doomsday Book consists of legal memoranda and contains seven main sections:
Powers Opinions.
History and Policy.
Operational Issues.
Bankruptcy and Insolvency Law Issues
International Issues
Regulatory and Enforcement Issues
Historical Collection of Primary Documents
The legal memoranda in volume 3 serve different purposes. For instance, the Powers Opinions memoranda are legal opinions of the Federal Reserve’s powers that present a framework of legal advice to central bankers acting in emergency situations so that they can avoid acting outside the scope of the Federal Reserve’s legal powers in emergency situations. Other memoranda in volume 3 clarify specific agreements and put them in historical context. Some memoranda are background reading for central bankers.
Volume 3’s first main section is Powers Opinions. This section is perhaps the most interesting part of the Doomsday Book. Powers Opinions discusses the Federal Reserve Banks’ authority to provide various types of emergency services and facilities that they are not in the practice of offering under normal conditions, and it discusses the legality of exercising those powers.
The Powers Opinions section includes eight subsections:
Sections 10B, 13(3) and 13(13) Authority
Securities Lending, Repo and Fed Funds
Loan Restructuring, Guarantees and Equity Kickers
Asset Purchase Authority
Gold Lending and Foreign Exchange Powers
Access to Federal Reserve Services
Borrowing and Miscellaneous
Statutory Interpretation Techniques
The Sections 10B, 13(3), and 13(13) Authority subsection has twelve memoranda:
Designated Financial Market Utility (DFMU) Lending Authority: Repo and FX Swap
The Authority of the Federal Reserve to Provide a Primary Dealer Credit Facility
Section 13(3) Lending Authority to Foreign Central Banks
Section 13(3) Lending Authority Disclosure Requirements
Ability of Reserve Banks to Lend to Foreign Central Banks
Section 10B and 13(3) of the Federal Reserve Act
Authority of the Federal Reserve to lend to Orange County
Federal Deposit Insurance Corporation Improvement Act (FDICIA) Section 142–Discount Window Operations
Federal Reserve Discount Window Authority to Lend to Broker/Dealers
Emergency Liquidity Assistance to a Nonbank
Eligibility for Discount of Mortgage Company Notes
Advances and Discounts by Federal Reserve Banks
The Securities Lending, Repo, and Fed Funds subsection consists of twelve memoranda:
Authority to Pay Interest to Primary Dealers on Cash Balances Held in Margin Accounts
Authority for the Federal Reserve to Purchase Fed Funds
Power of Reserve Banks to Purchase Fed Funds
Authority to Engage in Securities Lending Activities with Primary Dealers
Modification to Securities Lending Facility
Foreign Securities Lending
Exchange of Maturing Securities
Statutory Analysis: Overnight Cash Balance at Domestic Triparty Repo Custodian
Domestic Tri-party Repo
Authority to Engage in Reverse Repo Agreements
Legality of Plan for Lending Government Securities by Federal Reserve Banks
Authority of Federal Reserve Banks
The book argues that those opinions underlie many of the Fed’s fundamental domestic open market operations, such as repo, fed funds, and securities lending.
The Loan Restructuring, Guarantees, and Equity Kickers subsection contains six memoranda:
AIG Loan Restructuring-Reserve Bank Powers
Bank Authority to Issue a Guarantee
Equity Kickers and Reserve Bank Loans
Authority of Reserve Banks to Issue Guarantees on Behalf of Depository In- stitutions
Federal Home Loan Bank Standby Letter of Credit
REI/Authority to Acquire a Firm under Incidental Powers
The opinions in those six memoranda are largely about the Fed’s incidental lending powers, which were important during the 2008 recession.
The Asset Purchase Authority subsection includes nine memoranda:
Analysis of the Legal Authority for the Bear Stearns Transaction
The Authority of the Federal Reserve to Provide an Extension of Credit in Connection with the Acquisition by JP Morgan Chase of Bear Stearns
The Authority of the Federal Reserve to Provide an Extension of Credit to Bear Stearns through JP Morgan Chase
FRBNY Powers to Enter into Nonrecourse Lending Transactions
Nonrecourse Lending under Section 13(3) of the Federal Reserve Act
Section 14(b)(1) Municipal Securities
Options on Repurchase Agreements
Nonrecourse Lending under Section 10B of the Federal Reserve Act
Reserve Bank Purchase of Agency Obligation Section 14(b)(2)
The Doomsday Book divides the opinions in those nine memoranda into two categories: old and new. The book states that the older memos do not depend on section 13(3) and thus remain helpful independently. It suggests that the 1997 memorandum titled “Nonrecourse Lending under Section 10B of the Federal Reserve Act” is particularly useful. It is limited in scope to section 10B of the Federal Reserve Act, which was not subjected to the limitations on asset purchases imposed by section 13(3) of the Dodd-Frank Act. The memo titled “Nonrecourse Lending under Section 13(3) of the Federal Reserve Act” investigates extending the conclu- sions of the 1997 memo to section 13(3) of the Federal Reserve Act.
The Gold Lending and Foreign Exchange Powers subsection has twelve mem- oranda. The Doomsday Book states that a Reserve Bank’s gold lending and foreign exchange powers are interrelated closely, given that international transactions among different currencies (“cable transfers”) were ultimately settled in gold during the gold standard period. The subject of several of those memoranda is that the power to engage in foreign exchange transactions presupposes a power to borrow foreign exchange, and they provide a foundation for analyzing Reserve Banks’ swaps power. The memoranda titled “Section 2(a) of the Gold Reserve Act of 1934” and “Gold Loans” investigate the limits of that power, the most significant of which come from the Gold Reserve Act of 1934.
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