The Great Recession of 2008–9 rendered America’s central bank, the Federal Reserve System, an improbable hot new scholarly subject. On the one hand, the Fed was hailed as the savior of the world’s global financial system because of its rapid injection of liquid resources into the U.S. and, thereby, global financial markets as credit froze (under the direction of Fed Chair Ben Bernanke, whose economic studies of the 1930s pinpointed tight credit as a key factor in that crisis). On the other hand, it was denounced by its critics for propping up the very banks that caused the fiscal implosion and whose sloppy regulation by the same Fed permitted the crisis to unfold in the first place.

Hero or scoundrel? Heroic or complicit? Few commentators lacked an opinion one way or the other about the Fed.

Leading political scientist Sarah Binder, a distinguished scholar of Congress among other topics, takes on these competing interpretations to advance a new framework for understanding the place and powers of the Fed in the U.S. polity. With her coauthor Mark Spindel (an investment manager), Binder uses historical analysis, archival and other primary sources including testimony in Congress, and an inventory of the 879 bills introduced by 333 House and Senate members between 1947 and 2014 to reach a disarmingly uncontroversial thesis: The Fed and Congress need each other politically and economically.

Congress members can blame the Fed as the manipulator of monetary policy (particularly through interest rate setting), which affects not just the vast sums earned by billionaire hedge fund managers but also the mortgage and credit rates encountered by millions of ordinary Americans on a daily basis. Conversely, the Fed accrues power quietly during periods of economic growth when its Federal Open Market Committee (FOMC) decisions are below the radar screen of most voters, though closely watched by the financial institutions it regulates on Wall Street. When the political heat of disgruntled voters during a recession heats up, lawmakers engage in some reform of the Fed, but invariably of a modest form.

Binder and Spindel call this framework the “interdependence” model: “[I]nterdependence—rather than independence—best characterizes the Fed’s position within the broader political system” (p. 236). They add that “legislators’ interest in monetary policy is reactive and countercyclical. But episodic interest does not create an independent Federal Reserve. Because Fed credibility is vulnerable to congressional-led cycles of blame and reform, Fed success in managing an inherently cyclical economy depends directly on maintaining political support” (p. 232; emphasis added). Blaming the Fed helps Congress members to insulate themselves from blame for the economic hardships raining down on their constituency voters, as congressional response to the Great Recession illustrates, according to the authors (pp. 229–31). The Myth of Independence complements an older form of analysis by economists that traced the responses of the Fed to congressional hearings.

This argument is buttressed by a detailed account of the historical evolution of the Federal Reserve, from its founding legislation in 1913 through significant iterations in the 1930s, 1950s, and 1970s in which 18 new laws and various amendments redefined, usually broadening, the powers of the Fed. These periods of major reform of the Fed by Congress, according to Binder and Spindel, are closely associated with the pressures boiling up on lawmakers from voters affected by recessions, but the balance between initiatives that weaken the central bank versus enhancing its capacities are roughly evenly matched. They cite Dodd-Frank’s concurrent expansion of Fed regulatory powers, with its new restrictions on the Fed’s emergency lending powers, as an instance of this dual approach to accountability.

This is a major work of scholarship, and Binder and Spindel deserve to be congratulated for the achievement. The authors offer a highly readable narrative of the Fed’s development over the century from its founding, and although this history has been the subject of existing scholarship—notably studies by Donald Kettl, John Woolley, and Allan Meltzer—the originality of Binder and Spindel is a keen focus on the Fed as a function of congressional creation and maintenance. But a number of lines of the argument can be challenged.

The authors have immersed themselves deeply in the world of the Fed and Congress, and this leads to an undeveloped critical perspective. They frequently recite the arguments of reformers (including statements from non-U.S. central bankers, such as the Bank of England’s Paul Tucker [p. 231]) without considering how these claims are self-serving. Many critics of the Fed would conclude that the institution’s egregious record in failing to regulate the mortgage industry and other financial institutions before 2008 exposed the Fed’s ludicrously sutured rather than independent relationship with finance; it willingly sacrificed the autonomy necessary to be an effective regulator. Binder and Spindel report this regulatory sloppiness but do not invoke it in the analysis. They approvingly cite Ben Bernanke’s mantra that the Fed needs to be embedded in (or “have roots in”) Wall Street, rather than interrogating this view as self-serving for the Fed and indeed for finance. The authors do not pay much attention to what the economic sociologist Greta Krippner calls “financialization” since the 1990s (driven in part by massive post-1990 deregulation of the financial sector) and how it has created the Fed’s structural dependence on finance, which necessarily denudes the central bank of its regulatory powers. The bitter experiences of many mortgage holders and workers in 2008 and the years after certainly invite such a reflexive commentary.

Binder and Spindel are curiously uninterested in the sociology of professionalization that imbues the Fed with one of its great strengths, reputational power rooted in a claim to expertise. When they discuss the shifting influences of Keynesianism and then monetarism on the Fed’s decision making, they reproduce the standard economists’ justifications of these frameworks and why they change. Neglected in the analysis is the many millions of dollars that are funneled to researchers and journal editors responsible for “independent” research on Fed policy—a similar practice in medicine is barred by multiple checks against conflicts of interest.

To sustain the proposition that Fed independence is a “myth,” readers will anticipate a robust demonstration of congressional powers of accountability. But here, The Myth of Independence is disappointing in a number of respects. First, as Sarah Binder herself documents in other important scholarly work, Congress is “dysfunctional” and largely incapable of efficacious policymaking. How does this “broken branch,” in Thomas Mann and Norman Ornstein’s phrase, muster the political will and bipartisan strength to regulate the Fed and hold it accountable? Indeed, both in this book and one of the most important previous studies of the Fed—Donald Kettl’s Leadership at the Fed (1986)—encounters between wily Fed officials and blustering members of Congress reveal how the former elide reform and distract the latter with lip-service changes. Consider the watering down of Senator Christopher Dodd’s (D-CT) initial efforts to hold the Fed accountable after its part in the Great Recession. Dodd had concluded that the scale of Fed regulatory failure before 2008 was grounds to weaken the central bankers’ regulatory powers; these efforts were substantially defeated in the wake of lobbying by the Fed and its well-heeled supporters in the financial sector. (Ditto to the Warren-Vitter reform proposals in 2015 [pp. 222–24]). In fact, Binder and Spindel’s reporting of this outcome acknowledges the influence of bankers and banking associations in preventing the change (pp. 235–36), but the implications of this influence are not incorporated into the overall analysis and conclusions. Instead, the authors admire the adroit dancing steps of Bernanke and Janet Yellen to defend their institution’s powers.

In addition, at times the book retreats to a troubling form of argument about an “intuitive” (p. 237) sense that the Fed is dependent on Congress, rather than a cogent demonstration of this proposition. But the complexity of modern financial systems and their keen interaction with monetary systems does not automatically free the Fed from political significance and calculations. The Fed is calculating in its use of obfuscation and complexity to conceal its most consequential actions—a pattern that the authors do not pursue analytically.

The book then offers an excellent account of core aspects of the Federal Reserve and its relationship with Congress. But there are omissions. Two stand out. First, the authors focus on interest rates and the Fed’s responsiveness to congressional complaints about monetary policy. But interest rates were near zero or quite low during the past decade. Instead of catering to Congress, the Fed seized the power of lawmakers over fiscal policy during this period and used a series of unilateral unorthodox policies to boost the supply of money. Little about this unilateral and unaccountable action by the Fed appears in this work. Distributional consequences is another blind spot. Eight decades ago, Harold Lasswell reminded us that “Politics is who gets what, when, how” (Politics: Who Gets What, When, How, 1936). This imperative to political science is missing in The Myth of Independence. Undeniably, the Fed’s interventions after the 2008 Great Recession to prevent a collapse of the financial system in the United States and globally spared many from job loss and misery. But, following Lasswell’s dictum, it is important to avoid a false equivalency between the gains for finance and those for the general public. The Fed’s policies delivered lopsided and often concealed benefits for finance, the top 1%, and the institutional interests of the Federal Reserve Bank that enjoys more power and autonomy than at any time in its 100-year history. Over the past decade, the most affluent acquired sharper gains and enjoyed greater protection against lasting deep losses than did most Americans who gained less and suffered bigger and more lasting harm.