Fed Chair Unsexy, But Crucial to All of Us
08 Aug 2013
Fed Chair may not be as sexy a job as President, but the occupant of that position is just as vital, if not more so, to every citizen. Both in front of and behind the scenes, a battle is being waged by those who would seek to influence the Presidential choice making mechanism and public opinion as well. Not surprisingly, the best candidate may not win.
Some would argue that President Obama has already made up his mind and his hemming and hawing about considering various options is window dressing to look like there is actually a contest for the job. In recent days, Obama has balked at a Senate rebellion in his own party wherein they are insisting he promote Janet Yellen, current Vice Chair to Ben Bernanke, to his position when he leaves in January. Her bona fides are excellent and she has been widely acknowledged as someone who not only warned of impending disaster back in 2007, but made many correct calls over the past twenty years. The President tipped his hand last week, however, when he offered a strong defense of his preferred candidate and former financial advisor, Larry Summers.
Summers is part of the deregulatory cabal that got us into this economic mess in the first place. He has also profited in the millions via his Wall Street connections. Here’s why it matters. I looked up Fed Chair for Dummies to make sure I understood the job correctly:
Under the chair’s leadership, the board’s responsibilities include analysis of domestic and international financial and economic developments. The board supervises and regulates the Federal Reserve Banks, exercises responsibility in the nation’s payments system, and administers consumer credit protection laws (including the Truth in Lending, Equal Credit Opportunity, and Home Mortgage Disclosure Acts).
The board plays a major role in the supervision and regulation of the U.S. banking system, including state-chartered banks that are Federal Reserve System members, bank holding companies, member banks’ foreign activities, foreign banks’ activities in the U.S. The board supervises approximately 900 state member banks and 5,000 bank holding companies.
The chairman also reports to Congress in re the Fed’s activities and monetary policy, testifying on numerous other financial issues, and sits on the boards of the International Monetary Fund, the Bank for International Settlements (BIS), and the National Advisory Council on International Monetary and Financial Policies.
In other words, we’d better get this one right.
Economist Edward Lotterman notes that “the trust of the general citizenry in the central bank is as important as the trust in the court system, legislative bodies and the chief executive.” Here is his money quote:
“…[I]t is important that no one be appointed to the Fed Board who has gotten rich from Wall Street, either as an executive of a major financial firm or by giving speeches to, consulting for or serving as director of such a firm.
When Harvard economist and now apparent Fed chairman candidate Larry Summers left office as Clinton’s Treasury secretary, his financial disclosure forms showed a net worth of less than $500,000. When he joined the Obama administration eight years later, they showed $17 million to $39 million in assets. Being president of Harvard for five of those years certainly brought in some money, but the bulk of it represents the sort of largesse financial mega-firms eagerly shower on those expected to have political influence at high levels.
That sort of Wall Street-derived wealth should automatically rule out Summers and anyone else with such ties.
That Obama seems not to give this a thought should worry citizens.”
It is indeed worrisome that the Obama administration continues the point/counterpoint exercise of touting Summers for the job.
On Monday, Bloomberg reported that Asia and the emerging markets favor Yellen for, among other reasons, her lack of a deep allegiance to Wall Street Bankers. She is reputed to care more about Main Street than Wall Street; concerned with returning us to full employment and therefore, less likely to ram a continuation of “too big to fail” policy down the American gullet. That may not make Wall Street happy, but it should make Main Street ecstatic.
On Tuesday, Bloomberg featured a counterpoint editorial by Cass Sunstein praising Summers in rapturous terms. The significance of this is that Sunstein is married to Samantha Power, a long time advisor to President Obama. We can surmise from whence the marching orders were coming. It was odd, though, that the only case Sunstein could make for Summers being a man of the people was his role in assisting the bailout of GM and Chrysler – and more significantly, “cash for clunkers.”
Self-proclaimed feminist and Facebook COO Sheryl Sandberg, author of the #1 bestseller, Lean In: Women, Work and the Will to Lead, even penned a commentary in support of her old mentor, Summers, stating, ‘Oh no, he’s not a sexist. Really!’
Meanwhile the whisper campaign against Janet Yellen, reported to have been started by Summers himself, continues unabated. The Wall Street Journal had the nerve to quote – and tout – the New York Sun’s odious argument about Yellen’s “Gender Backed Currency” in its editorial, The Female Dollar, while Summers’ supporters whisper about her lack of “gravitas.”
Notice how the definition of Fed Chair refers to chairman and not chairperson. Our predisposition should be to appoint the most qualified contender. Gender should not matter. And yes, women can do the math.
The Fed Chair leads an organization with tentacles that affect our lives on a daily basis. It is bad enough so many financial institutions are still bound by an unshakeable patriarchy. Couple that with a comfort zone in which the same operators potentially watch each other’s profit margins as well as backs and we have a worrisome situation.
Yellen, by virtue of her excellent qualifications, would shake things up simply because the current club would have to deal with someone who is stands apart from the modus operandi of “business as usual” that Summers surely represents.
Isn’t that what we need?
(Published on EPIC TIMES)
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