Mike "Mish" Shedlock posted a response to this claptrap on his blog today:
Anti-Libertarian Nonsense From Henry Kaufman & Company
If you want to learn more about the libertarian/Austrian criticisms of central banking, this would be the place to start. The gist of the article is that saying the Fed followed a philosophy that was "too libertarian" is nonsense. The Fed can't be libertarian any more than the military can be pacifist. Its existence precludes such a label by definition.
I would add that you can immediately dismiss anyone who says that lack of regulation allowed the creation of companies that were "too big to fail" or "led to companies receiving bailouts." There is no such thing as a company that is too big to fail, only a company with enough political power to demand that it be enriched at the expense of the taxpayer. Bailouts have nothing to do with deregulation; they stem from the same source that thinks intervention will fix what ails the economy. Bailouts, like regulations, are just another link in a long chain of interventions.
We should decommission the Fed, and leave failing companies to their fates. This includes public-private monstrosities like Fannie Mae and Freddie Mac as well as failed corporations like AIG. These dying behemoths are being held in suspended animation at taxpayer expense, and their girth is clogging up the marketplace and choking off resources that would be better employed by new market actors.