By David Harrison | The Wall Street Journal
The Federal Reserve on Monday adopted a rule curtailing its flexibility to rescue struggling firms during a crisis, seeking to assuage Capitol Hill concerns about the central bank’s broad and largely unchecked powers to pump money into the financial system.
The rule was required by the 2010 Dodd-Frank financial overhaul law, which directed the Fed to limit emergency lending to “broad-based” programs rather than to a select few institutions. Many lawmakers had said the Fed operated with too few restrictions as it tried to keep big banks and other firms afloat during the 2008 financial crisis, when the central bank used its emergency lending powers for the first time since the Great Depression.
