Systemic Risk Creator

"Governments can't get incentives right most of the time in their own policies. So the idea that regulators can better align banker incentives than a competitive marketplace fails the laugh test. ... Bankers who owned large equity stakes in their banks--and therefore had a strong incentive not to see them fail--also did not outperform their peers in the crisis. ... There's the systemic risk that the [Fed] created with the untralow interest rates that subsidized credit for so much of this decades; the privileged status bestowed upon the ratings agencies by the SEC and others; and regulatory capital rules that favored securitized mortgages over the same loans when held in a portfolio by the banks. ... Going forward, the biggest systemic risk is the emerging reality that the politicians consider out biggest financial institutions too big to fail. ... The real money maker now for the too-big-to-fail banks is the subsidy they get from the implicit and explicit guarantees they enjoy", Editorial at the WSJ, 23 September 2009, link: http://online.wsj.com/article/SB10001424052970204488304574428882996324304.html.

I agree with the WSJ. The Fed creates systemic risk. That anyone wants the Fed to "regulate" systemic risk, means only the Fed should stop doing whatever it is doing, if it means anything.