The absurdity of the debate about who should be the next chairman of the Federal Reserve Board is NOT in the debate about Larry Summers versus Janet Yellin. Nope. It’s in the questions not being asked.
The debate is descended into stupidity because, not surprisingly, it has focused a lot on personalities. Is Larry Summers an egotistical, abusive person (yes)? Is Janet Yellin a woman (uh, OK…).
Here is the absurdity:
President Obama’s choice of a replacement for the Federal Reserve chairman, Ben S. Bernanke, is coming down to a battle between the California girls and the Rubin boys.
The fact that you can’t find much difference between “conservatives” and “liberals” on the question of who should run the Fed is starkly demonstrated by this quote:
“Ben Bernanke, along with George Bush and Barack Obama, saved us from another Great Depression,” said Senator Charles E. Schumer, Democrat of New York, echoing the views of others in his party. “Twenty years from now, that’s what history will say about all three of them.”
But, here are three of the important questions not being asked (there are others), certainly not by the lazy transcribers of press releases (formerly known as “journalists):
1. Is there any difference between the boy and the woman about the $16 trillion the Fed lent out, basically in secret, to banks all over the world, without any Congressional oversight in advance?
As Bernie Sanders found out:
The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. “As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world,” said Sanders. “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”
Among the investigation’s key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. “No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president,” Sanders said.
2. Is there any difference between the boy and woman about whether either of them believe their job is to ensure full employment, as the Fed’s charter requires — but no one seems to ever talk about. And what is the level either the boy or the woman would say is “full employment?
3. Is there any difference between the views of the boy or the woman about the staggering conflicts of interest inherent in having bankers serve on the Federal Reserve Board — an institution that is supposed to help REGULATE the banking industry by virtue of its being the lender of last resort? Jamie Dimon served until recently as a board member of the New York Fed — during a time when the Fed was deciding whether to hand out hundreds of billions of dollars in low-interest loans to…banks.
Sanders, again, had it right:
“The conflicts of interest are so apparent that they’re laughable…Here you have the Fed, which is supposed to regulate Wall Street. Then you have the CEO of the largest Wall Street company on the board which [it] is supposed to be regulating. This is the fox guarding the henhouse.”