2008 Annual Report cover

May 26, 2009

Richmond Fed's Annual Report Features Essay on the Financial Crisis

Richmond, Va.

The Federal Reserve Bank of Richmond today released its 2008 Annual Report, which features the essay "The Financial Crisis: Toward an Explanation and Policy Response."

Authors Aaron Steelman, director of publications, and John A. Weinberg, senior vice president and director of research, discuss the key events of the financial crisis, examine which factors contributed to it, and consider how policymakers might most effectively respond. At the core of their discussion is the role that explicit and implicit government guarantees played in encouraging unwise risk-taking by financial institutions and the problems that can result from treating some institutions as “too big to fail.” The authors write: “While the liberal provision of credit can cushion the effects of a crisis, expectation of such credit availability can dampen incentives to take actions that may limit the likelihood of a crisis. This tradeoff lies at the heart of any effort to design a set of policies that achieves a balance between the roles of government and market forces in disciplining the incentives of participants in our financial system.”  

The Richmond Fed’s Annual Report also includes reports on the region’s economy and the Bank’s operational and financial activities. And it takes a special look at the Bank’s involvement in communities throughout the Fifth District of the Federal Reserve System.

The Annual Report is available on the Bank’s Web site, or by contacting the Bank’s Research Publications group at (800) 322-0565.

The Richmond Fed serves the Fifth Federal Reserve District, which includes the District of Columbia, Maryland, North Carolina, South Carolina, Virginia and most of West Virginia. As part of the nation's central bank, we're one of 12 regional Reserve Banks that work together with the Federal Reserve's Board of Governors to strengthen the economy and our communities. We manage the nation's money supply to keep inflation low and help the economy grow. We also supervise and regulate financial institutions to help safeguard our nation's financial system and protect the integrity and efficiency of our payments system.


Contact Us


Aaron Steelman
Publications Director
(804) 697-2658