The B*tch-Fighting Fed Takes on Congress Too
Snake Oil/Free Kool Aid
by David Kramer
I'm not sure what sort of production I'm watching but here's the plotline so far. (I used to watch novelas back in the day, trust me, I got this)
For some reason, Congress suddenly grew a pair and decided it wanted control of the Fed even though it's had it all this time and up until now rarely actually applied it because, well, it's easier to just let the Board figure it out. As long as the dips stay somewhat moderate, no one seems to care. Every now and then you get a Ron Paul who starts going at their throats and digging around for answers but he's rare and that's probably how the Fed and Congress both like it. Stupid ass people keep trudging along and don't realize that the dollar in their hand is no less a specter of faith than the Virgin Mary's face on a piece of toast. Believe.
If the Congress v the Fed thing weren't enough, you have bitch-fighting within the Fed itself. A few presidents are pissed off, claiming the Board doesn't adequately represent their positions nor best interests. Slapslapslap take that, Bernanke. I'm not sure what the goal of all of this is but I believe I called it months ago. The regional banks will start cockfighting for space; expressing their views, declaring their positions, making it clear that they were not the ones standing idly by when the monetary policy machine failed again and let inflation run rampant. I get the strategy I'm just not so sure about the execution. It's the fucking Board. Good luck with that.
In order to accomplish this objective, the regional banks are going to have to sacrifice their virgins to the volcano. Even the Fed's own don't quite understand the distinction between their government and quasi-government structure, how can they possibly expect America to? You don't come leaping out of the darkness after all these years and expect people to embrace your supposed lofty goals for their financial well-being. Especially when the actions of the Federal Reserve - specifically in the last 3 years - have so obviously eroded everything the poor idiots held near and dear. All they wanted was revolving credit, a big screen, and an SUV in the driveway. They know who gave them the crack now and worse, they know who took it away. The Fed has quite a bit of convincing to do.
It's going to take a lot more than angry letters about the Fed's positions to accomplish that.
And then there's the whole problem with the Fed being politicized beyond the point of repair. Congress does not take cutting off the crack lightly and unless the Fed flashes its money clip, this particular bitch-fight will only get worse.
Just a guess.
A U.S. Senate compromise to create a consumer protection unit in the Federal Reserve encountered a wall of resistance over the scope of the powers planned for the regulator.
Senator Bob Corker, the Tennessee Republican, and Banking Committee Chairman Christopher Dodd, the Connecticut Democrat, drew immediate complaints from colleagues yesterday for suggesting a unit within the Fed. The proposal would be a retreat from the Obama administration plan for a stand-alone agency and a victory for the financial industry.
Democrats on the banking panel were opposed or reluctant to give the Fed consumer responsibilities. Senator Jeff Merkley of Oregon said the Fed had an “abysmal” record on consumer protections. Republicans had different concerns. Judd Gregg of New Hampshire told reporters in Washington the unit “can’t be autonomous within the Fed.”
In the ultimate irony:
“It’s a joke,” Frank, a Massachusetts Democrat, said yesterday in a telephone interview. Consumer protection “has been the most conspicuous failure by the Fed historically.”
The Fed has one bad ass to-do list.
Central fucking bankers. What can you do with them? Watch, I guess. Bitch-fighting! Slap some mud on the conference table and let's make it a show.
Even the guy who hates moral hazard believes the Fed should at least keep the easy money button:
Federal Reserve Bank of Richmond President Jeffrey Lacker said legislative proposals to strip the Fed of bank supervision powers are “misguided” and threaten to weaken its ability to lend to financial institutions.
“As long as the Federal Reserve is responsible for discount-window lending, it makes no sense to diminish the Fed’s robust role in the supervision of a range of banking institutions, from large to small,” Lacker said today in remarks to the annual conference of the Institute of International Bankers in Washington.
Say it with me one more time: bitch-fight. And I'm not calling Jeff Lacker a bitch (the nerve. Do you know me? Um, this might be taking it a bit far but... I'd never.), I'm saying they won't even be able to decide on what color napkins to put their coffee cups on at the FOMC conference table, let alone when to pull the trigger on this exit strategy they still don't have.