The House Financial Services Committee Ranking Member Barney Frank wants to take away Federal Reserve regional President's voting rights on the effective funds rate.
Frank announced Tuesday he will introduce legislation to strip the 12 regional Fed bank presidents of their votes on the central bank’s interest-rate setting Federal Open Market Committee.
Under its current structure, 12 of the Fed’s 19 members vote at interest rate setting meetings. The seven members of the Fed’s board of governors in Washington, who are appointed by the president and confirmed by the Senate.
The regional Fed presidents are picked by their individual boards of directors, often regional bankers and local business leaders. While the president of the key Federal Reserve Bank of New York also always has a vote on the FOMC, the remaining eleven Fed bank presidents rotate as voting members.
The idea is to remove from power those regional bank Presidents who are voted in by the private sector. The WSJ:
The bill would remove from the 12-member policy-setting Federal Open Market Committee the five members who represent regional Fed banks. Only the seven-member board in Washington, which currently has two vacant seats, would get to vote on interest rates. The congressman said this would make the Fed more democratic and increase “transparency and accountability on the FOMC” by eliminating those officials who are effectively picked by business executives.
The bill effectively puts setting the Federal Funds Rate more in the hands of government Federal Reserve appointees, who already hold a majority vote in the FOMC. It also seems Frank's plan is to leave the New York Federal Reserve in place, whose President always has a vote on the FOMC. The New York Fed Bank President is also appointed by the private sector.
Anyone want Tim Geithner, previous President of the New York Federal Reserve, who completely missed the impending financial derivatives implosion and a key architect of the financial bail outs.....to have more power setting interest rates?
Are they guilty of questioning the 'party line'?
At least three regional presidents appear to be questioning the politically correct conventional wisdom (the 'party line'?)
In particular Dennis Lockhart is quoted: "There is virtually no net job creation resulting from new business formation in recent quarters."
2OLD4OKEYDOKE
Would you like to try writing? You seem to find great little pieces. It takes a lot of work, especially any original material but you come up with stuff in comments I sure didn't catch and I know EP readers, lurkers, others would want to read more details.
Serious commitment
It's one thing to skim EP and express myself here and there, but to provide a story with details and assurance of accuracy and impartiality is something else again. It would have to be a serious commitment, and I guess I would lose my anonymity.
Even though I steal an hour now and then for EP, I have commitments for my time through November.
I really appreciate the width and the depth of EP content. It's my global reality check for impressions I gather locally.
So, thank you.
Inflation "hawks"
Smoke and mirrors.
Frank's proposal is going nowhere, and he was probably targeting inflation "hawks" rather than Lockhart.
It's just that I've noticed Lockhart's remarks, and I like someone who tells it like it is. Lockhart, I believe, has been stating facts, rather than advocating policy in public.
My opinion (all 2¢ worth) is that rates will go up in 2012. The big question in my mind is COLAs.
"Hawks" story by Greg Robb of MarketWatch
new business?
New business? I don't think people understand how hard it has become to secure a business loan to start a new business. It's become a never ending cycle of floundering... this is my breakdown: Man has job. Man gets laid off from job because of recession. Man then has to collect unemployment and max out his credit cards to stay afloat. Man's credit drops dramatically from over usage of cards. Man applies for new job but is turned down because the employer checks his credit report. Man gets frustrated and decides he can go it alone and formulates his business plan. Man approaches bank for small business loan and is turned down. Man then wisely seeks implement credit repair only to find that the services cost an exorbitant amount a month.
Anyway, say adios to whatever social support we've been getting through the years... it's all going to war and illegal immigrants. Hurrah for the good ole US of A.
Hi, I'm Ed. Nice to meatchew.
credit games to start a business
or credit games generally are insane. When you need credit, they deny and jack up the rates, when you don't, that's when they try to get you as a customer.
Absolutely ridiculous, esp. for anyone wanting to start a small business.