Some economists, such as John Taylor, have asserted that the Fed was responsible, or at least partially responsible, for the United States housing bubble which occurred prior to the 2007 recession.
They claim that the Fed kept interest rates too low following the 2001 recession, The housing bubble then led to the credit crunch. Then-Chairman Alan Greenspan disputes this interpretation. He points out that the Fed's control over the long-term interest rates critics have in mind is only indirect. The Fed did raise the short term interest rate over which it has control (i.e. the federal funds rate), but the long term interest rate (which usually follows the former) did not increase.
The Federal Reserve's role as a supervisor and regulator has been criticized as being ineffective. Former U.S. Senator Chris Dodd, then-chairman of the United States Senate Committee on Banking, Housing, and Urban Affairs, remarked about the Fed's role in the present economic crisis, "We saw over the last number of years when they took on consumer protection responsibilities and the regulation of bank holding companies, it was an abysmal failure."
In the 2010 midterm elections, the Tea Party movement, comprising conservatives, made the Federal Reserve a major point of attack; it was picked up by Republican candidates across the country. In Utah, GOP Senate candidate Mike Lee accused the Fed of trying to "monetize the debt" by printing money to buy government bonds. Fed officials have hotly denied that. GOP Senate candidate Ken Buck in Colorado said Congress should be "shining a light on the Federal Reserve" because it is too cozy with private interests. GOP Senate candidate Rand Paul in Kentucky, whose father Congressman Ron Paul has long attacked the Fed, argues that the Fed is hurting the economy by lowering the dollar and by its easy money policies that cause booms and busts.
One criticism of the Fed, typified by the non-mainstream Austrian School, is that the Federal Reserve's control of interest rates is an unnecessary and counterproductive interference in the economy.
The individual Federal Reserve Banks "are the operating arms of the central banking system, and they combine both public and private elements in their makeup and organization." Each bank has a nine member board of directors: three elected by the commercial banks in the Bank's region, and six chosen—three each by the member banks and the Board of Governors--"to represent the public with due consideration to the interests of agriculture, commerce, industry, services, labor and consumers." These regional banks are in turn controlled by the Federal Reserve Board, whose members are appointed by the President of the United States.
Another objection is the Fed's lack of transparency. In particular, many believe that the public has a right to know what goes on in the Federal Open Market Committee (FOMC) meetings. Source