Laurie Essig

Fed must remain super secret or we risk... accountability

[caption id="" align="alignleft" width="176" caption="Image via Wikipedia"][/caption]

Apparently it's not enough that the bankers have brought us to the brink.  Now we must endure even more of their hubris as they tell Congress that there can be no federal regulation because "they know what they're doing."  Um, yeah. The vice chairman of the Federal Reserve, Donald Kohn, warned Congress that the Obama administration's proposal to allow some federal oversight of monetary policy would be an economic disaster.  Allowing the Government Accountability Office  monetary auditing powers over the Fed would result in higher interest rates and chill investors since they'd be afraid that "politics" not "economics" would determine monetary policy.

The Federal Reserve strongly believes that removing the statutory limits on GAO audits of monetary policy matters would be contrary to the public interest by tending to undermine the independence and efficacy of monetary policy," (Kohn) said. He also said it could "cast a chill" on monetary policy deliberations by making officials nervous ideas they throw around behind closed doors could become public.

Kohn warns Congress on meddling in Fed's affairs | Politics | Reuters. I cannot help but wonder what those "ideas thrown around behind closed doors" might be?  Something like this? Banker one: Hey, I've got a great idea.  How about we make a bunch of high interest loans to people who can't afford them at super high interest rates and then bundle them up in a bunch of nice little packages and sell them on the open market. Banker two: But isn't that what caused the credit crunch and economic downturn? Banker one: No!  It was the damn pesky federal government trying to regulate us that caused the downturn.  Regulation killed our ability to make profit.  Well, not actual regulation because we haven't had that for three decades.  But the threat of regulation was enough to make the whole thing collapse. Banker two: Well, then I've got an idea.  Why don't we make it so complicated and difficult to understand for those pesky politicians that they'll never know what hit them. We'll throw out words like derivatives and toxic assets and they'll nod their heads and agree to no regulation because they won't want to look like they have no idea what's going on. Banker one: Brilliant idea.  Good thing our doors were closed so this conversation doesn't get heard.

Fed must remain super secret or we risk... accountability

[caption id="" align="alignleft" width="176" caption="Image via Wikipedia"][/caption]

Apparently it's not enough that the bankers have brought us to the brink.  Now we must endure even more of their hubris as they tell Congress that there can be no federal regulation because "they know what they're doing."  Um, yeah. The vice chairman of the Federal Reserve, Donald Kohn, warned Congress that the Obama administration's proposal to allow some federal oversight of monetary policy would be an economic disaster.  Allowing the Government Accountability Office  monetary auditing powers over the Fed would result in higher interest rates and chill investors since they'd be afraid that "politics" not "economics" would determine monetary policy.

The Federal Reserve strongly believes that removing the statutory limits on GAO audits of monetary policy matters would be contrary to the public interest by tending to undermine the independence and efficacy of monetary policy," (Kohn) said. He also said it could "cast a chill" on monetary policy deliberations by making officials nervous ideas they throw around behind closed doors could become public.

Kohn warns Congress on meddling in Fed's affairs | Politics | Reuters. I cannot help but wonder what those "ideas thrown around behind closed doors" might be?  Something like this? Banker one: Hey, I've got a great idea.  How about we make a bunch of high interest loans to people who can't afford them at super high interest rates and then bundle them up in a bunch of nice little packages and sell them on the open market. Banker two: But isn't that what caused the credit crunch and economic downturn? Banker one: No!  It was the damn pesky federal government trying to regulate us that caused the downturn.  Regulation killed our ability to make profit.  Well, not actual regulation because we haven't had that for three decades.  But the threat of regulation was enough to make the whole thing collapse. Banker two: Well, then I've got an idea.  Why don't we make it so complicated and difficult to understand for those pesky politicians that they'll never know what hit them. We'll throw out words like derivatives and toxic assets and they'll nod their heads and agree to no regulation because they won't want to look like they have no idea what's going on. Banker one: Brilliant idea.  Good thing our doors were closed so this conversation doesn't get heard.