And that's not all the newly radicalized Fed has done. It broke the rules by allowing Goldman Sachs and GE Capital to call themselves "banks" -- just in time to collect their taxpayer-funded bailouts. But it hasn't shown any flexibility when it comes to demanding that banks use some of their low-interest Fed loans to lend to the people and companies that will use it to create jobs.
The Fed has even broken its own rules in order to protect bad bankers. As Prof. Steven Davidoff noted in the New York Times: "In Blocking Activists, the Fed Protects Poorly Performing Banks." It's also protecting poorly performers bankers -- like the ones that sit on its boards.
In one case the Fed blocked a shareholder action by invoking a rule which said an outside party couldn't have more than 25 percent control of a bank -- but the shareholder would only have acquired 22 percent control. As Davidoff documents, Fed is repeatedly bending or violating its own rules to prevent shareholders from exercising their rights to limit executive compensation or take action against underperforming or ethically-challenged executives.
The Fed has changed the playbook for bankers over and over. But whenever someone suggests imaginative programs to stimulate the economy by helping consumers or small businesses the Fed suddenly decides it's a stickler for the rules.
Resistance Is Futile
In our interview for The Breakdown last week, Paul Krugman reiterated his statement that his former Princeton colleague Ben Bernanke has "joined the Borg." The "Borg" is the collective alien entity from Star Trek that takes over people's identities and leaves them with no other mission but expanding its own power.
These Federal Reserve boards represent the Corporate Borg in all its unchecked power -- but the power they possess is power that we have given them, through our elected representatives.
It doesn't have to be this way. There are good folks on the Committee, like Janet Yellen, Sarah Bloom Raskin and Daniel Tarullo.
But they're the exceptions, not the rule.
Enter Sanders
That's why Sen. Bernie Sanders' Federal Reserve Independence Act is so important. The bill would eliminate these conflicts of interest and force the Fed boards to stop serving bankers' interests and return to the Fed's original mission. People should insist that their Senators support it.
The bill follows on the Federal Reserve Transparency Act, which was cosponsored by Sen. Bernie Sanders and Rep. Ron Paul. That bill demanded a public audit of the Fed, which is how we learned about those massive secret loans. That act showed that the left and the right can work together to change our broken central banking system.
It's time to reunite that left/right coalition. Ron Paul may be wrong about the need for a central bank, but he's right when he says that the Fed must be accountable to the people.
Dissing Dimon
Which gets us back to Jamie Dimon. When the prominent economist Simon Johnson first demanded Dimon's resignation he noted that, while his role is sometimes described as "advisory," Dimon sits on the Management and Budget Committee which supervises the pay of senior Fed executives.
That committee also approves the self-evaluation of senior Fed executives - which essentially means it gives them their performance reviews. It reviews and approves the Fed's overall budget, too, including the budget for auditing bankers like Jamie Dimon. According the Fed itself, its other main responsibility is to "review and endorse the Bank's strategic plan."
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
2
2
1
