Market Intervention

California has long been in the vanguard of national trends. Since mid-2000, California has ex-perienced a considerable number of problems with its electricity market, including fluctuating prices and shortages. California’s electricity woes give us reason to pause and consider the future of U.S. electricity markets and of energy policies in general. Electricity is an important part of the U.S. energy infrastructure, accounting for more than one-third of U.S. energy consumption. If other states experienced problems with their electricity markets similar to those in California, the effects would be felt throughout the economy. Nearly half the states are restructuring their electricity markets, and many more are consider-ing doing so. As Chart 1 shows, eight states have already implemented restructuring of their elec-tricity markets. Sixteen states and the District of Columbia have enacted legislation or issued regula-tory orders that will restructure their electricity markets, while 18 states are investigating the possi-bility of restructuring. Only eight states are not cur-rently taking any steps toward electricity market restructuring. A proposal that would open real estate brokerage and management to banking organizations has generated a maelstrom of controversy, as evi-denced by more than 44,000 comment letters and e-mails that have deluged the Federal Reserve Board. The major banking industry trade groups have joined forces as propo-nents of the proposal, squaring off against the National Association of Realtors, which spearheaded a write-in campaign opposing it. The realtors ’ arguments caught the attention of Congress, which prevailed upon the Fed to extend its deadline for submission of comments to May 1, 2001, and prompted the House Financial Institutions and Consumer Credit Subcommittee to hold hearings on the proposed regulation