Cutting the IOER rate even to zero would be unlikely therefore to reduce the federal funds rate by more than 10 to 15 basis points. The effect on longer-term rates would probably be even less, although that effect would depend in part on the signal that market participants took from the action about the likely future course of policy.
Closing the regulatory gaps which the crisis has revealed – however important that is – would be too little. Financial reform has to go beyond that and establish the necessary institutions and regulations to deal with systemic risks. Financial reform will not save us from any future financial crisis but it can significantly dampen the frequency and intensity of financial crises in the future.