The response from the Obama administration to the 2008 financial crisis used indirect government intervention to prevent market forces from putting the large banks and financial titans out of business. The government decided to bail out the hegemons of the financial world, such as Wall Street and big banks, choosing to retain the status quo. The government continued with the conservative consensus of opting for larger financial market stability rather than reforming the system. There was a move towards the core tenets of the conservative consensus, which stood for a deregulated economy, while intervention to restore equilibrium to the market goes against the principle, as free market economic theory argues that the forces of supply and demand would self-correct any market failure. As the power given to unelected institutions meant the conservative consensus was being pursued, a lack of direct government intervention meant the economy was moving closer to a free market.
The US economy’s turn to a financialized system was a primary reason for the increased power of the Treasury and the Fed. “The government became the manager of the credit system on behalf of private wealth holders,” said Levy. As the managers of the main portion of the us economy, the Fed and the Treasury gained immense power. Furthermore, being unelected bodies and thus unpoliticized, they could act immediately. In contrast to the slow-moving Congress, the institutions were able to take decisive action to maintain the financial status quo. The secretary of the treasury and the head of the Fed would provide bailouts of billions of dollars to the financial giants who were hit by the recession, ensuring that financial stability was maintained. The need to maintain financial stability came from the US’s position as global hegemon; the dollar had to remain strong for the US to apply economic pressure and maintain its position. The Fed had initially gained powers such as control over monetary policy to prevent politicization. Still, due to the unelected nature of the body, there was a lack of accountability. According to Levy, these bodies gained power due to the shift towards neoliberalism in capitalism. The idea is that specialized institutions like the Fed and the Treasury should deal with the market so that there could be a move towards a perfectly free market.
Will Wright 