In case anyone is wondering why the statement released by the FOMC on Wednesday was muddled, just take a look at the website of the Federal Reserve System regarding the composition of the Committee.
Let’s count ‘em up and see where it stands.
- Janet L. Yellen, Board of Governors, Chair
- Jerome H. Powell, Board of Governors
- Jeremy C. Stein, Board of Governors
- Daniel K. Tarullo, Board of Governors
- William C. Dudley, New York, Vice Chairman
- Richard W. Fisher, Dallas
- Narayana Kocherlakota, Minneapolis
- Sandra Pianalto, Cleveland
- Charles I. Plosser, Philadelphia
The five members of the FOMC who are listed at the bottom are elected by bankers. The four at the top of the list are appointed by the government. As a side note, it is particularly interesting that only four of the nine are trained and educated, bona fide economists. Back to the point, I am a layperson, but counting I can do. Also, I don’t intend to sully Kocherlakota – but he and Mr. Stein cancel each other out, leaving still a majority for the bankers.
I don’t have statistics, but I would be willing to place a wager that the financial system and the Federal Reserve System employ more macroeconomists than all other economics disciplines combined, outside of academia. If you have no skill or desire to teach, you go work for a financial institution or the government. And I am sure the lines become blurred as to not really be able to tell the difference between the two, for the economists, of course. I am not sure that those lines between the financial sector the government aren’t technically blurred for just about everyone but me.
So when someone says that the Fed is doing what the economics profession wants, this list should help unblur the lines just a tad.
Barney Frank, though I rarely agreed with him, I did agree when he proposed to split the Federal Reserve in half by stripping the monetary policy function away from banking regulation while crafting Dodd-Frank. When he didn’t get that, he made a proposal to strip the regional bank presidents off the FOMC. But he didn’t get that either. It really is too bad.
Fast forward to 2014, Harry Reid hesitates to bring the remaining three Fed governor nominations up for a vote. Of course he wasn’t a rich man when he headed to the Senate, but now he’s one of the richest members in the Senate, worth millions. I could be wrong, and I am certainly not accusing the Senator of anything untoward. But someone must be managing all that dough for him and helping him make more; and it probably isn’t Mr. Parsons (bottom update here), oh no. Nonetheless, Mr. Reid appears to be content with bankers running the Fed when I am not entirely sure his constituents would be considering Nevada was the hardest hit by the Great Recession and still has a huge unemployment problem.
Actually, the thing about Mr. Parsons is just a wild stab in the dark. But the world is very small. And the truth, whatever it is, is likely stranger than fiction.