These changes enabled a series of acquisitions that resulted in a number of very large, highly complex financial holding companies centered on large commercial banks. At the same time, independent investment banks had grown into a group of very large, complex, and highly leveraged firms. Of course, financial engineering had been rapidly changing the character of the financial services sector as a whole.
Given the large size of the Federal Reserve's balance sheet, the FOMC is employing new tools to implement monetary policy. In particular, to raise the federal funds rate we increased the interest rate we pay on reserve balances that depository institutions hold at the Federal Reserve.