Regional Fed Chiefs: Elite Insiders Have “Usurped Authority”
Regional bank presidents of the Federal Reserve have described the ongoing financial policy making of Washington officials as a complete usurpation of authority and an invocation of emergency powers.
The district chiefs’ authority over borrowing costs has been marginalized in the past two months as Chairman Ben S. Bernanke and the Fed Board of Governors in Washington made their own decisions on emergency measures to flood the economy with cash, reports Bloomberg News.
Several former and current regional bank presidents have intimated that they now have little to no influence over the Federal Reserve’s actions and that the central bank has effectively been completely hijacked by high ranking insiders.
“The Board has usurped authority,” said William Poole, former president of the St. Louis Fed and now a senior fellow at the Cato Institute in Washington. “This dramatic change in policy direction has not been announced or even acknowledged.”
James Bullard, Poole’s successor at the St. Louis Fed, has described the shift as a move toward a “new world” and clearly holds out little hope that the situation will improve. “Whatever our communications problems are now, they are going to be magnified in this new world we are going to be in,” Bullard has said.
“If I am a regional Fed bank president, I have had my power diminished a lot,” said Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. in New York, who used to work at the New York Fed. “I think of it as war powers for the Board of Governors.”
The Fed has twelve regional presidents that are supposed to offer a counterbalance to the central board of governors, however, the regional presidents have recently not even been offered the opportunity to vote on initiatives such as a new $600 billion program to buy mortgage-related debt and securities and a $200 billion facility to support consumer debt securities.
This trend is likely to continue at a meeting next week when regional presidents could be told to just go along with a Fed announcement that it is set to lower interest rates again in order to allow increased borrowing at a cheaper rate.
Fed chairman Ben Bernanke hinted last week that the Fed will likely also purchase Treasury or agency securities in “substantial quantities.”
Since the Original bailout bill was passed in early October, the Fed has swallowed up all manner of new regulation powers. As we reported in our September 25th article, the bill set a precedent to allow the government and the Fed carte blanche to do whatever they want to long as it is done in the name of stabilizing financial markets.
The Fed can nationalize any company or industry and use taxpayer money for whatever purpose is deemed necessary, without any oversight. The policy is also unreviewable by any court, it will remain in perpetuity.
This is not just about continued seizure of taxpayers’ money and the continued sacking of the dollar, it’s about the imposition of a giant new infrastructure of control and regulation on behalf of the private, run for profit, Federal Reserve.
Article written by Steve Watson
Tuesday, Dec 9, 2008