Campaign News

A former aide to Federal Reserve Chair Janet Yellen has broken ranks with his former employer and issued a blueprint for a sweeping reform of the U.S. central bank, including regular government audits and shorter term limits for policy makers.

Dartmouth College professor Andrew Levin targeted four areas of change for the Federal Reserve system: make the Fed a fully public institution; ensure the process of picking regional Fed presidents is transparent; set seven-year term limits for regional presidents and Board governors; and make the entire Fed subject to external review.

The proposals were taken up by the union-backed activist group Fed Up, which promoted them Monday in a conference call with journalists, and come during an election year where the central bank has been a campaign topic.

“There is one key principle in this document which is the Fed needs to become a public institution,” Levin said. “Pragmatic, reasonable Fed reform should be able to be passed by the Congress, by both parties. That is my hope.”

The Dartmouth professor worked two decades at the Fed, and was a special adviser from 2010 to 2012 to former chairman Ben S. Bernanke, and Yellen when she was vice chair, according to his biography page at the university.

Legislative Plans

Republicans in the U.S. Senate and the House of Representatives last year proposed legislation that included reforms of the central bank, though none has become law. Fed spokeswoman Michelle Smith declined to comment.

As recently as February, Yellen said that while the Fed might be structured differently if it were created today, she believed it still worked well and wasn’t “broken.”

“Of course the structure could be something different and it’s up to Congress to decide that -- I certainly respect that,” she said at a Senate hearing. “I simply mean to say I don’t think it’s broken the way it is.”

The Fed system, which sets interest rates for the U.S. economy, is made up of a Board of Governors in Washington and 12 regional Fed banks. It was created by an act of Congress, yet private banks hold stock in the regional Fed institutions as a result of the way the capital structure was set up when the Fed was born more than a century ago.

“The Federal Reserve is the only central bank that I know of that isn’t a fully public central bank,” Levin said in an interview.

Levin said the 12 regional banks should become fully public entities, meaning they have to somehow eliminate or repurchase the stock they have issued to private member banks. He also proposed banning anyone affiliated with financial institutions overseen by the Fed from serving as a regional Fed director.

Three Classes

Each regional Fed has a nine-member board of directors which includes three Class A directors who represent private member banks, three Class B directors picked by the private banks to represent the public -- typically local business people -- and three Class C directors chosen to represent the public by the Fed board in Washington.

The presence of financial interests on Fed boards has been a long-standing source of criticism. Currently, for example, James Gorman, chairman and chief executive of Morgan Stanley, sits on the New York Fed Board as a Class A director.

Prior the passage of the Dodd-Frank financial reform act in 2010, Class A directors also helped pick the 12 regional Fed bank presidents, subject to the approval of the board in Washington. That potential conflict of interest, with bankers appointing their own supervisors, was limited by Dodd-Frank, which restricted the selection process to Class B and Class C directors.

Levin said the current system of picking Fed presidents, which is led by regional board directors, is too secretive. He recommended the reserve bank boards accept nominations from the public, publish a list of eligible nominees, and then engage in a “selection process that involves genuine public participation.”

The Dartmouth professor also said that the entire Fed system should be subject to “external reviews” and disclosure requirements “just like every other key public agency.”

“The Government Accountability Office should produce a regular annual review of all aspects of the Fed’s policies, procedures, management, and operations,” Levin wrote in his proposal. The Fed has strenuously objected to calls by Republican lawmakers that monetary policy decisions be subject to GAO audit. In the interview, Levin said the GAO should focus on the management and operations of the Fed system, “not so much on monetary policy.”

“Part of the financial crisis was due to mismanagement in the division of supervision at the Fed,” Levin said in an interview. GAO reviews would provide assurance to the public and Congress that the “Fed is a well-managed organization,” he said.

By Craig Torres

Source

Federal Reserve Chairwoman Janet Yellen delivered her semiannual testimony on the U.S. economy and monetary policy to the Senate Banking Committee Tuesday. In her prepared remarks, Yellen acknowledged that the country’s economic recovery has not fully extended to the African-American population.

“Jobless rates have declined for all major demographic groups, including for African-Americans and Hispanics,” Yellen said. “Despite these declines, however, it is troubling that unemployment rates for these minority groups remain higher than for the nation overall, and that the annual income of the median African-American household is still well below the median income of other U.S. households.”

An accompanying report revealed that the median Black household income in 2014 was $40,000, which means African-American households are earning just 88 percent of their pre-recession incomes.

The 2014 median white household income was $67,000. According to the report, white, Asian and Hispanic households have regained 94 percent of their pre-recession earnings.

Furthermore, unemployment rates for African-Americans continue to be lower than they were prior to the recession, compared to white unemployment rates, which have nearly returned to original levels.

The Fed has faced growing criticism from activists and lawmakers who accuse the banking system of ignoring the economic disparity faced by minorities in the U.S. Supporters say Fed-controlled interest rates have a direct impact on the economic success of Black Americans.

Tuesday’s comments were a stark contrast to the position taken by Yellen last July, when she argued there was nothing the Reserve could do “about any particular group.”

The statements fired up Connie Razza, director of strategic research at the Center for Popular Democracy, who issued a statement in response.

“With African-Americans still mired in our own Great Recession, we should be hearing a positive vision from the Fed on how to foster full employment,” Razza said on behalf of the Fed Up Coalition. “While the economy is complex and the Federal Reserve’s tools are limited, there is plenty the Fed can do to improve the labor market for Black workers and to reduce racial inequality in the job market.”

The Fed Up Coalition is a consortium of labor unions, community-based organizations and policy think tanks fronted by the Center for Popular Democracy and Action for the Common Good. The group maintains that the economic upswing is a myth for most demographics and stresses that keeping interest rates low will give the economy a chance to truly recover for everyone. Modest rates will raise wages, bringing the country closer to full employment and eliminating the need for discriminatory hiring practices, according to the campaign.

During Yellen’s February address to the House Financial Services Committee, several Democrats pressed the issue of Black unemployment rates.

“Nobody is suffering from unemployment like the African-American community,” Georgia Rep. David Scott said at the hearing, per CNN. “We have got to get the Fed to get off the dime and put the issue of African-American unemployment on the front burner. That is the core of all of the domestic issues that we’re facing.”

The unemployment rate for African-Americans in May was 8.2 percent, which was double the rate of whites at 4.1, according to the Bureau of Labor Statistics.

By Shaundra Selvaggi

Source

Brand: Zara

Problem: In 2015, the Center for Popular Democracy surveyed workers at the New York stores of Spanish retailer Zara. The survey found that the workers believed black customers were targets of racial profiling and that lighter-skinned employees had better hours and more opportunities for promotion in the company than darker-skinned employees.

Response: Zara denied the allegations.

What have they done to prevent racial targeting in the future? Representatives for the company didn’t answer Racked’s request for comment.

Read the full article here.

Early this month, New York City Mayor Bill de Blasio announced a guaranteed $15 minimum wage for all city government employees by the end of 2018. This is a big win for over 50,000 workers across the city struggling to provide for their families, including those directly on the payroll and tens of thousands working at non-profits that contract with the city.

Unlike in Seattle and Los Angeles, where city officials are empowered to raise the minimum wage for the entire workforce in their cities, Mayor de Blasio is unable to unilaterally raise wages for all New York City workers. That power lies with Gov. Andrew Cuomo and the state legislature. The governor's efforts to lift the minimum wage to $15 are being hampered by a Republican-controlled state Senate.

De Blasio's decision to raise wages for city employees is a crucial independent step towards a more equitable city - and should be seen as an inspiration for cities around the nation. It also reflects the power and momentum of a groundbreaking worker-led countrywide movement demanding higher wages.

Even as state and federal administrations drag their feet on the inevitable question of a decent minimum wage for working families in the United States, de Blasio's gutsy move shows cities can and should take matters into their own hands.

The mayor's minimum wage raise closely follows his announcement last month giving six weeks paid parental leave, and up to 12 weeks when combined with existing leave, to the city's 20,000 non-unionized employees. The mayor has now moved to negotiate the same benefits with municipal unions. Again, New York City private sector workers must look to Albany or Washington, D.C. to move on paid family leave for all.

Mayor de Blasio's recent actions support his goal of lifting 800,000 New Yorkers out of poverty over ten years. More than 20 percent of the city's population lives in poverty, a huge swath of a city commonly associated with extraordinary wealth.

The last couple of years have seen unparalleled momentum from workers themselves - from New York City to Los Angeles and Chicago - calling for livable wages, resulting in minimum wage raises for fast food workers and other groups.

Workers are not waiting patiently on government officials – they are organizing in an unprecedented way. Progressive mayors like de Blasio are responding with sound policy, while less responsive officials are being put on notice. Cities like Los Angeles, New York City, and Chicago are paving the way, showing that it is possible to act independently of state and federal governments.

In addition, laws raising the minimum wage to more than the pitiful federal standard of $7.25 an hour have passed in a number of states. There are now campaigns to raise the floor and standards for workers being led in 14 states and four cities. This momentum is building into a crescendo that will have deep implications for the 2016 presidential election.

Nearly half of our country's workers earn less than $15 an hour and 43 million are forced to work or place their jobs at risk when sick or faced with a critical care-giving need. Now is the time for cities to listen to their workers and override state and federal passivity to allow millions of hard-working Americans to provide for their families.

*** JoEllen Chernow is minimum wage and paid sick days campaign director at Center for Popular Democracy. On Twitter @popdemoc.

Source: Gotham Gazette