Ex Richmond Fed Counsel: "We Pretty Much Made it Up"

Let's discuss Historical Perspectives on Form and Function: The evolution of the Fed through the years. Remarks to the Conference of Federal Reserve Bank Chairmen and Deputy Chairmen by James McAfee, General Counsel, Federal Reserve Bank of Richmond, September 2004 shall we?

In my quest to figure out why in the hell Richmond Fed management decided to take on this load of crap after already suffering through Fedgate with Ken Lewis crying via Jeffrey Lacker's BlackBerry, I came across a rather scathing comment that echoed my thoughts. "Why would Richmond do this?" Actually (s)he said this:

It seems the “fox may now be guarding the henhouse”?.

At a bare minimum, any reasonable person would expect that the President and Board of Directors of the 5th District Federal Reserve Bank would have waited until the conclusion of all legal actions in this matter before rushing to appoint an attorney as Chief Legal Counsel while there are legitimate questions about her role and conduct in the LandAmerican [sic] 1031 debacle. One wonders why or whether, even though Ms. Gluck apparently advised Land America to segregate 1031 monies, she did not disclose the material deficiencies in Land America’s custody arrangement for those funds, at least to the Treasury and regulatory groups. I believe she had an ethical duty to make those disclosures. The unanswered questions about the nature and extent of her activities relative to the 1031 monies causes me great concern about her appointment as the Federal Reserve’s chief legal officer - a post that requires unquestioned ethical conduct and adherence to sound business practices at all times.

At this point, my perception of Ms. Gluck’s conduct does not meet the high standards set by her predecessor at the Federal Reserve with whom I was acquainted and whose ethical standards and business practices were admired and clearly beyond reproach - at all times.

So whose stellar reputation was MG pissing all over in replacing him? Who was this guy?

It wasn't hard to find McAfee and I could see why the commenter above would make such claims regarding MG's predecessor.

I'll get to the ex Richmond Counsel who seems perfect for my favorite Reserve (there are none, btw, that part makes it funny) Bank in further detail later but thought you might like to see what I consider one of the best central banking quotes of all time from this speech. Thankfully these particularly enlightening words happened to fall into my lap in my quest to find McAfee's legacy:

The law called for a Reserve bank chairman and said what he should do, in the very general and vague way I just described, but the law said absolutely nothing for two decades about a president or governor or chief operating officer. For its first 14 years, the dominant force and dominant intellect in the Federal Reserve was Benjamin Strong, the governor of the New York Reserve bank, but his position was not established by Congress; it was a Federal Reserve invention. Reserve bank governors were invented at a conference in Washington, I suppose like this one, of the Federal Reserve Board and the Reserve bank chairmen, meeting together between the time Reserve banks were chartered in the spring of 1914 and the time they opened for business in the fall. [my emphasis]
Absolutely adorable when you look at it from a tactical perspective. Who is going to notice?

Wait a second. Did he really say this?

My third point is that as a way of harmonizing contradictory views, Congress often embraced vagueness on many important questions, leaving a lot to the imaginations of the men and women who have operated the Reserve System and a lot to negotiations among them. The history of the past 90 years is a history of strong personalities inventing and reinventing important aspects of the Federal Reserve and the relationship among its constituent parts. In this enterprise, congressional vagueness has been the reinventors' best friend. Indeed, the one time nobody stepped up to reinvent the Fed was in the Great Depression, and it would have been far better for our parents and grandparents if somebody had.

He did. So either McAfee is out of his mind or the coolest central banker I've seen in my short life. He might even argue that "central banker" is too vague a term, as there are lawyers and writers and even PR stars (hopefully not ones who used to work at Enron) all over Fed payroll. Fine. So why as a lawyer is McAfee spilling the central banker beans like "We totally made this shit up and Congress has no fucking idea"?

I don't have that answer. But according to one LandAmerica 1031 Exchange "victim" (what do we start calling these people?), it is hoped that James McAfee's replacement will take a page from his playbook and keep with the Richmond mantra. I'm still disappointed by the performance and haven't figured out what Richmond could have been thinking.

Did McAfee get to help with this hire??

The rest of his 2004 remarks are recommended. Thank goodness for unlimited data plans.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.