Activists: Fed Has Power to Spur Recovery in Poor Communities
The Charlotte Post - March 6, 2015, by Herbert White - America’s economy may be in recovery, but Simone McCray can’t...
The Charlotte Post - March 6, 2015, by Herbert White - America’s economy may be in recovery, but Simone McCray can’t see it.
McCray works at a Charlotte warehouse where she earns $8.10 an hour and lives with family to stretch her budget. A 2010 UNC Charlotte graduate with a degree in psychology, she has yet to land a job in that field.
“You don’t think you’re going to make $8.10 when you go to college,” she said. “That is not what they tell you.”More Americans are working than before the Great Recession of 2008, but African Americans are lagging. Figures released by the U.S. Department of Labor Friday showed the national unemployment rate fell to 5.5 percent in February, an improvement over the previous month.“With another strong employment report, we have now seen 12 straight months of private-sector job gains above 200,000 -- the first time that has happened since 1977,” said Jason Furman, chairman of the Council of Economic Advisers. “Moreover, 2014 was the best year for job growth since the late 1990s and 2015 has continued at this pace. But additional steps are needed to continue strengthening wages for the middle class.”But for African Americans, the jobless rate is double that of whites and the wage gap between the ethnic groups is getting wider.The Federal Reserve, which sets national policy on interest rates, is debating whether to boost the rate as a hedge against inflation. Progressive activists, however, are pushing the Fed to hold the line, arguing low rates will spur a jobs rebound, especially for low-income Americans.“Don’t put any brakes on the economic recovery,” said Pat McCoy, director of Action NC, which held a press conference Thursday to press the Fed. “Not only has it not yet been a full recovery, but in community of color, particularly in the African American community, unemployment rates, underemployment rates remain extremely high.”A study authored by the Center For Popular Democracy found that women and people of color are more likely to struggle to find work that pays a living wage. African Americans are especially hard hit with unemployment rates double the nation as a whole and plummeting wages.“Creating a strong American economy must include prioritizing a genuine recovery for the African American community,” the report summarizes.McCray wants to get in on the recovery. Saddled with debt from student loans, she’s looking for work that will allow her to meet financial obligations. Until then, she’s struggling to make ends meet.“My student loans are going to start going back into repayment and you have to have a way to repay them,” she said. “With jobs that are just above minimum wage, it’s kind of hard to stay afloat and pay your student loans, so you have to stay with family longer and not be out on your own and be independent sooner.”The Fed can help, activists insist, by resisting calls to raise interest rates. Corporate America and conservatives are pushing for an increase to prevent inflation, which is the simultaneous increase in consumer prices and devaluation of currency.“We need to continue to stimulate the economy through low-interest rates in order to serve these communities that need recovery,” McCoy said.As the Fed wrestle with the pros and cons of raising rates, Americans struggling to find work with a living wage are yet to be part of the nation’s limited recovery. Without a robust economic program, millions will be left out.“Only by pursuing genuine full employment will the Fed ensure that the recovery reaches Main Street and Martin Luther King Boulevard – and communities of working people throughout the country,” the CPD report’s authors wrote. “As the Fed makes crucial monetary policy decisions in the months and years to come, it must ensure that all communities can share in the prosperity of a functional economy.”
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These Cities Aren’t Waiting for the Supreme Court to Decide Whether or Not to Gut Unions
These Cities Aren’t Waiting for the Supreme Court to Decide Whether or Not to Gut Unions
In the face of the Janus case, local elected officials across the country are renewing our efforts to help workers...
In the face of the Janus case, local elected officials across the country are renewing our efforts to help workers organize—in traditional ways, and in new ones. Brad Lander is a New York City Council Member from Brooklyn and the chairman of the board of Local Progress, a national association of progressive municipal elected officials. Helen Gym is a Councilmember At Large from Philadelphia and Vice-Chair of Local Progress, a national network of progressive elected officials.
Immigration Advocates Praise de Blasio's Proposal for Municipal ID Program
Immigration advocates are praising Mayor Bill de Blasio's proposal for a municipal ID program. In his State of...
Immigration advocates are praising Mayor Bill de Blasio's proposal for a municipal ID program.
In his State of the City address, de Blasio said that the city would make ID cards available to all New Yorkers.
That includes people who usually can't get other forms of identification, like the homeless and undocumented immigrants.
On Tuesday, the Center for Popular Democracy released a report analyzing similar programs in other cities.
Advocates say that the program could be a big help to vulnerable populations.
"Without this ID, it can be difficult to register to a child for school. It can be difficult to open a bank account. It can be difficult to even exercise your right to vote, to file a complaint with the police department," said Brittny Saunders of the Center for Popular Democracy.
"We also want to make sure that this card is available to multiple constituencies in this city," said City Councilman Carlos Menchaca of Brooklyn. "There's so many constituencies in this city that can benefit from this card, so we want to make sure that we know all those so we design the best cards that everyone has it."
Menchaca, who is the immigration chair for the City Council, also said that the Council plans to hold hearings in the next month about the best way to design the program.
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The Fed should rethink how its conducts monetary policy
The Fed should rethink how its conducts monetary policy
There is a growing sentiment that the Federal Reserve needs to change the principles by which it manages our economy. ...
There is a growing sentiment that the Federal Reserve needs to change the principles by which it manages our economy. Federal Reserve officials are saying it. Community organizations, labor unions, and think tanksare saying it. And on Friday, 20 of the country's most prominent economists released a joint letter saying it.
Read the full article here.
Fed Pressed on Questions of Diversity
Fed Pressed on Questions of Diversity
The Federal Reserve faces criticism from lawmakers and others over its record on diversity at the same time the central...
The Federal Reserve faces criticism from lawmakers and others over its record on diversity at the same time the central bank is highlighting the economic outlook for minority groups.
Several Democrats on the Senate Banking Committee questioned Fed Chairwoman Janet Yellen on Tuesday about the selection process for regional Fed bank presidents, echoing the concerns of advocacy groups who have said the system should be more open and allow more public input.
The 12 regional bank presidents are appointed by regional boards, subject to approval by the Washington, D.C.-based Fed board of governors. As heads of regional Fed branches, they are expected to keep their fingers on the pulse of their local economies and participate on decisions about interest rates. Just two of the current presidents are women and none are black or Hispanic. The last black president stepped down in 1974.
Sen. Elizabeth Warren (D., Mass.) criticized the selection process, saying Washington officials represented little more than a rubber stamp. Earlier this year, Fed governors signed off on the reappointment of most bank presidents until 2021 “without any public debate or any public discussion,” she said.
“If you’re concerned about this, why didn’t you use either of these opportunities to say enough is enough. Let’s go back and see if we can find qualified regional presidents who also contribute to the overall diversity of the Fed’s leadership?” Ms. Warren asked.
“It just shows me that the selection process for regional Fed presidents is broken,” retorted Ms. Warren, calling on Congress to consider changing the process.
The Center for Popular Democracy, a left-leaning advocacy group, has been pressing the Fed for months to increase the diversity of its leadership, as have many Democrats on Capitol Hill who signed onto a letter from Ms. Warren to Ms. Yellen on the matter last month.
Presumptive Democratic presidential nominee Hillary Clinton has also weighed in. Her campaign released a statement saying the Fed “needs to be more representative of America as a whole.”
In a June 13 response to the lawmakers’ letter, Ms. Yellen acknowledged “there is still work to be done” on diversity within the Fed ranks “and I assure you that workforce diversity remains a priority for the Federal Reserve.”
In her prepared testimony Tuesday, Ms. Yellen stressed the need to ensure that the gains from the economic recovery are widely distributed.
She noted that blacks and Hispanics are still suffering some of the effects of the recession in more pronounced ways than other groups. Black and Hispanic workers still face higher unemployment rates than the workforce as a whole, she said.
“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,” Ms. Yellen said.
Diverging economic circumstances between white and black households predate the recession but the gaps widened after the financial crisis and have only barely narrowed in the recovery.
A Fed report released alongside Ms. Yellen’s testimony found that black households, which saw their median incomes fall 16% during the recession, are only 88% of the way back to prerecession levels. White households, by contrast, saw incomes fall only 8% and are already back to 94% of prerecession levels, the report said.
It is rare for the Fed to address the economic conditions for individual demographic groups. The central bank’s congressional mandate requires that it seek to hold down unemployment and keep inflation stable for the country as a whole. In the past, Ms. Yellen has said she was sympathetic to the economic troubles of minority groups but stressed the Fed’s options for addressing them were limited.
Ms. Yellen’s comments Tuesday suggest a rising recognition within the Fed that the racial gaps in the economy are becoming more pronounced and that there is a role for monetary policy to play in shrinking those gaps.
“It’s important for us to be aware of those differences and to focus on them as we think about monetary policy and work that the Federal Reserve does in the area of community development,” she said.
Ms. Yellen is set to address the House Financial Services Committee on Wednesday and could face many of the same questions.
By David Harrison
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Report: Hedge funds that ‘killed’ Toys ‘R’ Us ‘prey’ on Puerto Rico
Report: Hedge funds that ‘killed’ Toys ‘R’ Us ‘prey’ on Puerto Rico
Some of the hedge funds that are speculating on Puerto Rico debt also forced Toys R Us to shut down, according to a...
Some of the hedge funds that are speculating on Puerto Rico debt also forced Toys R Us to shut down, according to a report released by Hedge Clippers, which advocates for income equality by targeting hedge and private equity funds, in partnership with the Center for Popular Democracy, a nonprofit that advocates for workers rights.
Read the full article here.
New York’s Progressive Experiment Tees Up
Politico - November 4, 2013, by Edward-Isaac Dovere - Even New York liberals weren’t expecting things to go this...
Politico - November 4, 2013, by Edward-Isaac Dovere -
Even New York liberals weren’t expecting things to go this well.
Tuesday, voters in America’s most prominent city are poised to elect Bill de Blasio mayor and turn over every major lever of municipal government to a new breed of politics that’s been on the rise but never close to this level of power: a mix of young progressives, reconstituted ’60s- and ’70s-era lefties, newly active minority voters and deep-pocketed unions that have transformed themselves into expert campaign organizers.
What that will mean as they try to translate that ideology into a governing philosophy is a question that even people who’ve been leading the charge are still asking. And in New York, where there are more than 8 million residents (plus close to a million more who come in daily for work), 300,000 city employees and a $70 billion-plus budget, there’s a lot riding on the answer.
These are the people who formed the labor-funded, liberal-favorite Working Families Party and sparked Occupy Wall Street. They say government shouldn’t just allow for change — it should force new change on the city and private sector. That means universal pre-K; closed tax loopholes; pensions divested from fossil fuel companies; family-friendlier work policies, including financial support for single parents; and paid sick leave requirements. And on the housing front: more market regulation, leveraging of privately owned real estate that’s in trouble and greater community power over developers’ plans.
The reaction of the city’s business, real estate, finance and high-tech industry leaders to its new governing class-in-waiting has ranged from panic to scoffing at the stuff they say pipe dreams are made of. The political establishment in the city is skeptical any of it can work, especially without igniting a budget disaster. And the progressives in charge are superstitious enough that, despite their candidates’ long and overwhelming lead in the polls, they’ve avoided doing too much planning before election night.
One thing all sides agree on: A new era has arrived. Barring major upsets, former political-labor strategist de Blasio will be the mayor, longtime Upper West Side official and political maven Scott Stringer will be the city comptroller, and Tish James, a product of Brooklyn African-American activism and politics, will be the public advocate, roughly the equivalent of the city council president.
The city council speaker most likely won’t be picked until January, but even the conservative choices are liberal Democrats. And whoever gets the job will face a newly empowered City Council, in which the rapidly multiplying Progressive Caucus members include many unconnected to the traditions of go-along legislators, and have made clear they’re going to push for their own changes.
That array of progressive victories is “a dream,” de Blasio said on his way out of a late September fundraiser for Rep. Jerry Nadler (D-N.Y.), the godfather of this strain of progressivism in the city, that seconded as an advance celebration for the impending takeover.
“For a lot of progressives who’ve spent a whole lot of time on the steps of City Hall, this is the chance to get inside City Hall,” Stringer told POLITICO. “The challenge for all of us is to come together and govern and build our city for every New Yorker.”
Expectations are high, and made higher by the spirit of achieving what seemed impossible with unexpected election wins including de Blasio’s late surge and Stringer’s fending off Eliot Spitzer.
So what happens next, when these are the people confronted with a complicated and tight city budget, multiple costly labor contracts that are coming due for renewal, a crime rate that seems like it will statistically have to edge up at some point? How do they manage when they’re in charge, and not the outside instigators? And what happens when they’re heading into office promising major changes in rent costs and education, realignment of investments in city services and a detailed agenda of “broadly shared prosperity” — along with other liberal priorities like confronting climate change and improving senior care? When many competing interests are all going to be demanding attention from people who’ve never before been in positions of major power?
“There’s a lot you can do with really good leadership throughout the city that shares this agenda,” said Brad Lander, a city councilman who leads the progressive bloc and helped organize “Toward a 21st Century for All,” a collection of policy essays that’s become one of the main touchstones of progressive planning. “New York City is going to be an exciting laboratory.”
“What a pleasure it will be to have a city administration united with people who believe that you can increase the minimum wage, who believe that you can have paid sick leave, who believe that it doesn’t harm the city to treat workers and low-income people right, who believe that the purpose of an economy is not just to get the numbers on television but to help people live their lives, and who believe that the purpose of city government is to help all people — not just the 1 percent or the 5 percent or the 10 percent,” Nadler said, riling the crowd at an Upper West Side rally over the weekend.
At the rally, the talk was of how subway tokens cost only $1.25 and that Miley Cyrus wasn’t yet born the last time a Democrat was elected mayor. But that was a very different type of Democrat than what’s coming now — much more rooted in traditions of government spending and programs than the current strain’s emphasis on activist intervention, rethinking budget priorities and reeling in what they see as runaway wealthy interests.
“‘Liberal’s’ too soft,” actor-singer-activist Harry Belafonte declared at the rally to describe what he said was the most exciting political moment in his life in New York. “’Radicals.’ It’s time for radicals.”
There are limitations. Taxes — including the one on high-income earners that would pay for de Blasio’s signature expanded pre-kindergarten proposal — have to be approved by the state government, which also has the authority to take over city finances at any point if they begin to veer off track.
“It should be a comfort to people who are worried about the city going off the rails in a crazy far-left direction that Albany is not going to let that happen,” said Kathy Wylde, president and CEO of the Partnership for New York City, which represents business and financial interests across the city.
“I don’t think the primary concern is whether the mayor’s a lefty,” she said, reflecting the private-sector leaders she’s talked to. “It’s whether we’re going to have a mayor who can effectively manage 300,000 city workers and an $80 billion budget and not allow the city to run off the rails.”
“We have to govern,” Stringer said. “We have to do things through the lens of what we can afford and also what we can’t afford.”
At a meeting of municipally elected progressives in Washington state in late October, the same “tale of two cities” line that’s dominated de Blasio’s campaign kept coming up as people talked about how they could build support for many of the ideas that de Blasio’s about to have the power to do.
“It’s happening all over the country,” de Blasio said in a taped message to the Local Progress conference. “This is a tremendous moment for progressive activism.”
The mayors of Richmond, Calif., and Fitchburg, Mass., both attended, but as people there acknowledged, the importance and size of New York make de Blasio and the incoming officials a much bigger deal for the movement, in both spotlight and potential.
“It’s easy to talk on the outside than to be on the inside, actually preparing the meal, so that means they’re going to be judged on what kind of meal they prepare,” said Nick Licata, a former Seattle City Council president who’s the chairman of Local Progress. “It’s going to be a challenge — it’s always a challenge for any advocate group, left or right, when you go from proposing something to actually implementing it.”
John Del Cecato, a political consultant who was one of the main architects of de Blasio’s campaign, said there’s a clear reason why the revolution started in New York.
“There aren’t just pockets of extreme wealth and pockets of poverty anymore. We’ve got close to 400,000 millionaires, while half the city lives at or near the poverty line,” Del Cecato said. De Blasio’s appeal, he said, is the fact that the current state of affairs “is deeply troubling not just to those who are living the struggle every day, but to those who’ve done quite well who fear that New York is losing what’s made it such a special place for generations.”
Recalibrating the enormous city government to focus on pre-K, after-school programs, community hospitals, better wages and affordable housing is going to be difficult, and certainly won’t be fast, Del Cecato said.
But this year’s elections, he argued, are an important start to “move New York in a direction that acknowledges where we’re slipping behind, puts us on a new path and establishes a mind-set that we’re a city that leaves nobody behind.”
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Por qué la ciudad de Nueva York es una ciudad santuario modelo
Por qué la ciudad de Nueva York es una ciudad santuario modelo
Tras meses esperanza de que Donald Trump daría marcha atrás respecto a sus promesas de campaña contra los inmigrantes,...
Tras meses esperanza de que Donald Trump daría marcha atrás respecto a sus promesas de campaña contra los inmigrantes, lo opuesto ha sucedido. En las primeras semanas después de asumir el mando, Trump les ha declarado la guerra a los inmigrantes y ha prometido construir un muro en la frontera, aumentar las deportaciones y no dejar entrar a refugiados.
Su programa de gobierno va en contra de todo lo que este país valora y todo lo que la ciudad de New York siempre ha defendido. El compromiso de nuestra ciudad con los inmigrantes es el núcleo de nuestra identidad. Respetamos a los inmigrantes, apoyamos sus aspiraciones y trabajamos arduamente para que sean parte de la esencia de esta ciudad.
Como tal, la ciudad de Nueva York se considera desde hace mucho tiempo una “ciudad santuario”, donde las agencias locales de la ley se rehúsan a ser forzadas a cumplir políticas de inmigración del gobierno federal que perjudican a sus comunidades. Dichas políticas están en vigor desde hace varias décadas. Incluso Rudy Giuliani, cuando fue alcalde, defendió ardientemente las leyes que prohibían que los empleadores de la ciudad de Nueva York reportaran la situación inmigratoria de los neoyorquinos inmigrantes.
Cientos de ciudades, estados y condados siguen políticas similares. Entre ellos se encuentran algunas de las más grandes ciudades del país, como también pueblitos al interior de los estados donde ganó Trump. Las razones son las mismas: las políticas de santuario mantienen a las ciudades más seguras y prósperas al no forzar a los inmigrantes a la clandestinidad y permitirles aportar y llevar vidas plenas.
En años recientes, la ciudad de Nueva York ha ido incluso más lejos. Por medio del trabajo de muchas organizaciones de defensa, incluidas Make the Road New York y el Center for Popular Democracy, los líderes municipales han puesto en vigor una serie de programas que ayudan a los inmigrantes a tener una vida más segura y próspera, y que benefician a la ciudad de muchas maneras.
Por ejemplo, en el año 2014, el alcalde De Blasio dio inicio a IDNYC, el más extenso programa municipal de identificación en el país. Permite que los inmigrantes indocumentados abran cuentas de banco y tengan acceso a servicios sociales necesarios. Tiene un alcance de más de 850,000 personas y se ha hecho popular con una gran variedad de neoyorquinos, entre ellos muchos que no son inmigrantes (como yo).
La ciudad también ofrece excelente acceso lingüístico a los neoyorquinos que aún se encuentran en el proceso de aprender inglés, lo que incluye vitales servicios de interpretación y traducción en todas las agencias de la ciudad para los residentes que necesitan acceso a valiosos servicios municipales.
Para los residentes que enfrentan la traumática posibilidad de deportación y separación de sus familiares, la ciudad también ha creado un innovador programa a fin de proporcionar a los neoyorquinos en procesos migratorios acceso a abogados que tienen mucha experiencia en la defensa contra la deportación. Los clientes del programa tienen probabilidades aproximadamente 1,000 por ciento más altas de ganar sus casos de inmigración que quienes no tienen representación legal.
Con estas medidas, a la ciudad de Nueva York realmente ha elevado el estándar para otras ciudades en todo el país. Y ha sido beneficioso para toda la ciudad. Hoy en día, nuestra economía se encuentra en auge, la tasa de criminalidad es la más baja de la historia, y un nivel récord de turistas de todo el mundo vienen en masa. La protección de nuestros inmigrantes solo ha tenido consecuencias positivas para la ciudad de New York.
Seguiremos esforzándonos por lograr medidas de política que faciliten que los inmigrantes trabajen y vivan en la ciudad de Nueva York, y haremos todo lo posible para alentar a otras ciudades a que sigan nuestro ejemplo. A juzgar por el número de ciudades que se están pronunciando y declarándose santuarios tras los crueles e insensatos decretos ejecutivos de Trump, parece que el ejemplo de Nueva York ya está surtiendo efecto.
By Andrew Friedman
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America Has Become A Tyranny of the Few - But We Can Fight It
America Has Become A Tyranny of the Few - But We Can Fight It
We’re in the thick of the second post-Citizens United presidential campaign, and it’s already clear that allowing...
We’re in the thick of the second post-Citizens United presidential campaign, and it’s already clear that allowing unlimited funds to influence political elections was a terrible idea.
Half of the funds supporting presidential candidates from both parties comes from a mere 158 families — a miniscule percentage of America’s 120 million households — as documented by a recent New York Times investigation. Largely white, older, male, and Republican, they are also unrepresentative of what our multicultural society looks like.
As a result of this narrow group of donors controlling what’s on the political agenda, America has a fundamentally undemocratic system in which working class people and people of color are left on the margins, silenced in a political debate, they can’t gain access to — because they don’t have millions to share.
America has become a tyranny of the few, and Americans are fed up with the broken system. Last week, voters in Maine elected to increase funding from $2 million to $3 million for the Clean Elections Fund, which provides government grants to candidates who agree to limit their spending and private fundraising. It might be a long time before Citizens United is overturned. In the interim, it’s important that other states introduce similar legislation challenging existing financing models.
The tyranny of the few is two-pronged, however. Not only are our elected leaders being held accountable to wealthy donors instead of the people of our nation, the least privileged of this nation are simultaneously facing strong barriers to voting.
Our antiquated voter registration system results in roughly 62 million eligible voters not registered, either because they never registered or their registration information is incorrect. In a 2008 Current Population Survey, blacks and Latinos cited “difficulties with the registration process” as their main reason for not registering to vote. Whites disproportionately reported not registering because they were “not interested in elections or politics.” Barriers to voting registration are in many states especially well in place for people of color, workers and youth, who are targeted by voter suppression laws.
We could put an end to the error-ridden old-fashioned manual voter registration and step into the 21st century with automatic voter registration. Other states could follow the example set by California and Oregon, which are linking voter registration to the Department of Motor Vehicles. Through linking voter registration with public offices such as the DMV, revenue agencies, the Postal Service and others, the United States could secure over 56 million more voters, as a report from Center for Popular Democracy shows.
So to sum up: people of color and working class Americans aren’t just unable to place millions of dollars with politicians who will take care of them in Congress, they aren’t even able to vote for leaders who might serve their interests.
The outcome? Our America has become an oligarchy run by a tiny and overly privileged section of its population, whose lives and wishes for our nation are in stark opposition to the lives and dreams of the average American.
This is borne out in our legislation. Despite overwhelming public support for policies such as taxing those who earn more than $1 million a year, and laws that address inequality, workers’ rights, and protection of the middle class, we see the footprints of corporate powers all over our legislation.
We need to act fast by passing laws that disrupt this undemocratic cycle. We must break Congress’ dependency on big money and return the power to the people, but we can’t only rely on our lawmakers to change our nation.
It will take a lot of work, but we can’t allow for this undemocratic oligarchy to go on. Let’s not leave the future of our country in the hands of the wealthiest, let’s instead bring back democracy to our nation.
Source: Common Dreams
Former Yellen Adviser Proposes Sweeping Reform of Fed System
Former Yellen Adviser Proposes Sweeping Reform of Fed System
A former aide to Federal Reserve Chair Janet Yellen has broken ranks with his former employer and issued a blueprint...
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
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4 days ago
4 days ago