Activists offer ideas to police charter schools
A pair of activist groups, the Alliance for Quality Education and Center for Popular Democracy, is out with a guide —...
A pair of activist groups, the Alliance for Quality Education and Center for Popular Democracy, is out with a guide — or rather suggestions — for better policing and monitoring finances of the state’s charter schools, which serve some 90,000 students, mostly in New York City.
The report states that since charters aren’t subject to all the reporting requirements required of public schools, there has been waste and abuse.
It contends the state could lose $54 million to fraud at charter schools this year, based on an accounting system used by fraud examiners that assumes 5 percent of that kind of mismanagement and tomfoolery.
To be sure, these groups are not exactly charter-friendly: AQE is funded in part by the state teachers union; the Center for Popular Democracy is also aligned with the national teachers union, AFT, among other groups.
They want a moratorium on charter expansion — which could become a high-profile issue during the next legislative session.
Here is their release and report: One note: some of these problems outlined below including the issues at Harriett Tubman Charter School occurred several years ago and under different administrations.
Today, the Center for Popular Democracy and Alliance for Quality Education released a report titled Risking Public Money: New York Charter School Fraud that reveals vulnerabilities in the state’s charter oversight system that could potentially cost New York state taxpayers as much as $54 million in charter fraud this year alone.
“Our governor and other school privatization advocates have pushed relentlessly to expand the charter industry at the expense of public school communities in New York State,” said Billy Easton, Executive Director of the Alliance for Quality Education. “But the proliferation of charters hasn’t been matched by the oversight needed to ensure that public money intended for students doesn’t instead get lost to fraud, waste and abuse.”
The report finds that state agencies have audited just a quarter of New York’s more than 250 charter schools since 2005, largely relying on them to police themselves instead. Yet in a startling 95 percent of the charters examined, auditors found mismanagement and internal control deficiencies that have occasioned $28.2 million in known fraud, waste, or mismanagement. Recognizing that the industry cannot be trusted to monitor itself for problems, the report’s authors have offered common sense interventions to remedy the problem, and have called for a moratorium on charter expansion until meaningful public oversight has been put in place.
“We can’t afford to have a system that fails to cull the fraudulent charter operators from the honest ones.” said Kyle Serrette, Education Director at the Center for Popular Democracy. “Given that New York spends over $1.5 billion on charter schools and more than 90,000 children are enrolled, a lot is at stake. We can’t afford to wait for tens or hundreds of millions more dollars to be lost before policymakers address this glaring issue.”
Here are only a few statewide examples among the dozens in the report:
IN NEW YORK CITY: Harriett Tubman Charter School issued credit cards to its executive director and its director of operation. They charge more than $75,000 in less than two years. The charges were never approved or explained.
IN LONG ISLAND: Roosevelt Children’s Academy Charter School paid four vendor a total of $521,197 for significant public work and purchase contracts without fair competition.
IN ALBANY: Albany Commuity Charter School lost between $207,000 to $2.3 million by purchasing a site for its elementary school rather than leasing it.
IN ROCHESTER: Eugenio Maria de Hostos Charter School failed to enter into a competitive bidding process for several instructional contracts. Instead the school awarded contracts to board members, relatives and other related parties.
IN BUFFALO: Oracle Charter High School entered a 15-year building lease with Oracle Building Corporation, agreeing to pay them more than $5 million at a 20 percent interest rate.
Source: Times Union
OPPOSING A MINIMUM WAGE HIKE COULD COST THE GOP THE SENATE
Labor Day has started the sprint to the November election. And with more than 40 percent of U.S. workers struggling on...
Labor Day has started the sprint to the November election. And with more than 40 percent of U.S. workers struggling on less than $15 an hour, our economy’s tilt toward low-paying jobs has become a top economic issue this year.
Now, as GOP leaders fret that Donald Trump may drag down Republican incumbents, turning more U.S. Senate races into toss-ups, the Republican majority’s stonewalling of any action to raise the federal minimum wage could cost the party control of Congress.
New polling shows that close to 70 percent of voters in key swing states want an increase in the federal minimum wage—and that 60 percent or more support a $15 minimum wage in six of the seven states polled.
Try Newsweek for only $1.25 per week
Even more, the polling shows that candidates’ positions on raising pay could play a pivotal role in this year’s electoral battles for control of the U.S. Senate. The results show that the incumbent Republican U.S. senators locked in close races could lose critical support—and even their seats—over opposition to raising wages for working people.
In Pennsylvania, Wisconsin and New Hampshire, Democratic challengers Katie McGinty, Russ Feingold and Governor Maggie Hassan strengthened their leads over incumbent Republican Senators Pat Toomey, Ron Johnson and Kelly Ayotte when voters were made aware of the senators’ opposition to raising the minimum wage.
And in Arizona, Missouri and North Carolina, Democratic challengers Representative Ann Kirkpatrick, Jason Kander and Deborah Ross pulled ahead of Senators John McCain, Roy Blunt and Richard Burr, flipping those contests on their heads, when voters learned of the senators’ track records opposing raises.
For example, in Arizona—where John McCain has just emerged from his toughest re-election primary ever—a 43-43 tie turns into a 44-38 lead for Kirkpatrick once voters hear about McCain’s opposition to raising pay.
The polling comes as the National Employment Law Project Action Fund, the Center for Popular Democracy Action, the Working Families Organization and other grassroots groups in seven states begin to mobilize voters.
The coalition plans to engage in canvassing, hold candidate forums and wage debate protests, among other actions, to educate and energize voters around candidates’ positions on the raising the minimum wage.
While Donald Trump, who has been all over the map on the minimum wage, has announced he now supports an increase to $10, most Republicans in Congress remain opposed.
Leading Republican pollster Frank Luntz’s firm LuntzGlobal has warned minimum wage opponents, “If you’re fighting against the minimum wage increase, you’re fighting an uphill battle, because most Americans, even most Republicans, are OK with raising the minimum wage.”
Farm workers pick vegetables on a farm in Rancho Santa Fe, California, on August 31. Paul Sonn writes that Republican U.S. senators locked in close races could lose their seats over opposition to raising wages.
While Congress has refused to act, over the past three and a half years, more than 50 states, cities and counties, as well as individual companies, have stepped forward to approve minimum wage increases, delivering raises to 17 million workers.
And 10 million of those workers are in states or cities that have approved phased-in $15 minimum wages, raising pay for more than one in three workers in California and New York and beginning to reverse decades of growing pay inequality.
Historically, raising the minimum wage enjoyed the same bipartisan backing in Congress that it does with voters. But over the past 20 years, increasing polarization in Washington and the growing role of money in politics have led many Republicans to abandon their support.
As a result, the federal minimum wage today remains frozen at just $7.25 an hour. And taxpayers are being forced to pick up the tab, as low-wage workers in the seven states just polled must rely on $150 billion per year in public assistance to make up for their inadequate paychecks.
Candidates’ positions on the minimum wage have made a difference in close U.S. senate races before. Ten years ago, in Missouri and Montana, Democrats Claire McCaskill and Jon Tester successfully used their support for a higher minimum wage to highlight the difference between them and their opponents, Republican Senators Jim Talent and Conrad Burns, who both opposed raising the wage.
McCaskill and Tester rode the issue to an Election Day victory, helping to break a logjam in Congress and delivering the first federal minimum wage increase in 10 years in 2007.
With the public demanding action to boost pay, the Republican majority and individual candidates this fall face a clear choice: stop standing in the way of a long overdue federal minimum wage increase—or risk their political future.
By Paul K. Sonn
Source
Federal Reserve keeps key interest rate at zero, citing global turmoil
The Federal Reserve on Thursday voted to maintain its unprecedented support for the U.S. recovery, leaving a key...
The Federal Reserve on Thursday voted to maintain its unprecedented support for the U.S. recovery, leaving a key interest rate unchanged amid gathering clouds over the global economy.
In an official statement, the nation’s central bank said the job market is recovering and hiring is “solid.” But it expressed concern that inflation remains too low and exports have weakened. Meanwhile, the risk is building that turmoil overseas will drag down growth in America.
"Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term," the central bank's official statement read.
The decision to keep the Fed’s benchmark interest rate at zero amounts to a recognition that the robust recovery central bank officials had hoped for when they launched into an uncharted era of easy money during the throes of the 2008 financial crisis has yet to materialize. The Fed has repeatedly pushed back the goal line as the economy failed to deliver. Seven years after the central bank cut its target rate to zero, Fed officials believe the recovery is not yet ready to stand on its own.
At the press conference that followed the rate announcement Thursday afternoon, Fed Chair Janet Yellen said that a rate hike was still likely by the end of the year. But she reiterated that though “domestic developments have been strong, we want to see continued improvement in the labor market," and the central bank would like "to bolster our confidence that inflation will move toward" the Fed’s 2 percent target before a rate hike.
“We have very large drags from energy prices and import prices," Yellen said, adding that the central bank views those as transitory. As the labor market heals, "we will see further upward pressure on inflation," she said. “We expect to achieve our 2 percent goal over the medium term.”
Markets grew volatile immediately after news of the rate hold, going flat by the end of Yellen's press conference. The Dow Jones Industrial average closed down 0.4 percent and the Standard & Poor’s index closed down about 0.3 percent on Thursday.
Documents released by the Fed show most of the Fed's top brass now anticipate increasing rates only once this year, instead of twice. A growing minority think the central bank should not raise its benchmark rate this year at all, and one suggested it should stimulate the economy even more by taking the rate negative.
Three officials are advocating a 2016 liftoff, while one person pinned 2017 as the date -- longer than anyone has suggested so far.
“Even though the summer stresses in financial markets have abated, the impact of the intense market volatility on domestic economic activity is yet to fully play out,” Millan Mulraine, deputy chief U.S. macro strategist at TD Securities, wrote in a research note.
The Fed lowers its target rate when it wants to stimulate the economy by encouraging businesses and consumers to spend. It hikes when the economy begins to grow too quickly and inflation picks up, making saving money more attractive.
Timing, however, is crucial. If the Fed moves too soon, it risks undercutting the recovery’s momentum. Waiting too long could stock dangerous financial bubbles.
Yellen made reference to that risk at the press conference Thursday when asked whether the Fed should be moving sooner rather than later to raise the rates. "I don't think it's good policy to then have to slam on the brakes," she said.
The Fed modestly upgraded Thursday its expectation for economic growth this year from 1.9 percent to 2.1 percent, but the forecast is still lower than the robust expansion enjoyed a decade ago. The jobless rate has already fallen below the central bank's June estimate of 5.3 percent. The Fed adjusted its forecast to 5 percent. It also nudged up its estimate of core inflation from 1.3 percent to 1.4 percent.
In May, Yellen said speech that she expected the economy would be strong enough to raise the target rate by the end of the year. Other top Fed officials had signaled the long-awaited move could come during its meeting this month.
But that was before the jaw-dropping swings in financial markets over the past few weeks, including a 1,000-point plunge in the Dow Jones industrial average. Evidence is mounting that China’s breakneck economic growth is fizzling out faster than previously thought.
In the meantime, the strong U.S. dollar and low oil prices are weighing on inflation, which has run below the Fed’s target of 2 percent for years. The World Bank, the International Monetary Fund, Nobel-laureate Joseph Stiglitz and former Treasury Secretary Lawrence Summers have all called on the central bank to hold off on a rate hike, at least for now.
“Now is the time for the Fed to do what is often hardest for policymakers,” Summers wrote in The Washington Post recently. “Stand still.”
The calls for delay are also coming from a populist campaign known as Fed Up, which protested outside of the central bank’s buildings Thursday. Several lawmakers joined the demonstration, including Michigan Rep. John Conyers, who is sponsoring a bill that would require the Fed to target a 4 percent unemployment rate.
Not everyone agrees the Fed should wait, however. Richmond Fed President Jeffrey Lacker dissented from the central bank’s vote on Thursday. In aspeech earlier this month, he pointed to strong consumer spending, the sharp decline in unemployment and a pickup in inflation measured since the beginning of the year as reasons a rate hike is warranted.
“I am not arguing that the economy is perfect, but nor is it on the ropes, requiring zero interest rates to get it back into the ring,” he said. “It’s time to align our monetary policy with the significant progress we have made.”
In its official statement, the Fed attempted to assure investors and the public that after the first rate hike, it expects to make subsequent hikes only gradually. Though most officials predicted the Fed would raise its target rate several times next year, they also forecast it would remain below its historic norm of about 4 percent for several years. Fed documents released Thursday show the long-run median estimate at just 3.5 percent.
Each hike will also likely be small, analysts expect just one quarter of one percent. That would allow the central bank to assess how an economy grown accustomed to easy money operates under a new regime.
“One should never discount the importance of an interest rate change by a central bank merely because it looks small,” said Scott Sumner, an economist at the Mercatus Center at George Mason University. “Some pretty big avalanches have started from a small pebble being dislodged.”
Source: Washington Post
Groups demand 'responsible' contractors at Brooklyn Bridge Park
Brooklyn Daily Eagle - April 23, 2014, by Mary Frost - City officials and workers' advocates kicked off three weeks of...
Brooklyn Daily Eagle - April 23, 2014, by Mary Frost - City officials and workers' advocates kicked off three weeks of action at Brooklyn Borough Hall on Tuesday, demanding safer working conditions and better training at real estate development sites.
Two construction workers have died in the past month and several were injured at construction sites in New York City lacking state-approved training and apprenticeship programs, according to a coalition made up of Build Up NYC, the Center for Popular Democracy, the New York Committee on Occupational Safety and Health, and Public Citizen.
Build Up NYC President Gary LaBarbera and NYC Public Advocate Letitia James singled out Starwood Capital Group, developing condos and a hotel in Brooklyn Bridge Park, for allegedly using irresponsible sub-contractors.
They also targeted the Kushner Companies, developing the Watchtower properties in DUMBO, for refusing to come to terms with advocates' demands.
“Responsible development begins with jobs," said LaBarbera. "Starwood has not used responsible contractors or subcontractors on its Pier 1 development in Brooklyn Bridge Park. The Kushner Companies, the developer of the Watchtower properties have not made a commitment to use responsible contractors for all of the construction, operations, maintenance or security work for their big project.”
At a Starwood construction project in Manhattan, Stella Tower going up at 435 W. 50 St., two workers were injured in the past two months, La Barbera said.
Kushner plans to redevelop the Watchtower properties into a mixed-use high-tech campus, with at least 50 percent office space. Build Up NYC says, however, that Kushner "has refused to commit to hiring only responsible construction, operations and maintenance contractors who provide industry standard wages, benefits and training for all phases of this project including the $100 million renovation."
"The developers have not made any committment to create good jobs for Brooklyn residents with these projects," Public Advocate James said. "Brooklyn needs good jobs, real affordable housing, and a strong midddle class. Starwood and Kushner have benefited -- it's now time that Brooklyn residents benefit as well."
At the rally, the Center for Popular Democracy handed out copies of a report, “Developing Progress: Ensuring that public resources contribute to New York equity, resilience and dynamic democracy.”
The report focuses on the development projects at Brooklyn Bridge Park, where organizers want investors to review Starwood Capital Group’s performance in light of accusations that Starwood has partnered on the project with a general contractor that has "a history of dangerous practices, illegal behavior and faulty construction."
While the city and state pension funds, which have invested in the project, have Responsible Contractor Policies that require fair wages and benefits, Starwood has hired subcontractor Hudson Meridian, with a long history of noncompliance and a trail of lawsuits, according to the study.
The Center wants the city to institute safety and pay policies into its upcoming Request for Proposals for Pier 6, and recommends that penalties for violations be raised.
The group plans several events, including a vigil for workers on Thursday, April 24, at 6 p.m, at Walker Tower, 212 West 18 Street in Manhattan.
Requests for comments from Starwood and Kushner were not answered by press time.
Source
Push for Immigrants to Become Citizens
Mayors of New York, Los Angeles and Chicago Launch 'Cities for Citizenship' Wall Street Journal...
Wall Street Journal, Michael Howard Saul, September 17, 2014 - The mayors of the nation's three largest cities—New York, Los Angeles and Chicago—plan to launch a new effort on Wednesday to increase citizenship among legal permanent residents, an effort officials hope will spread across the country.
The initiative, titled "Cities for Citizenship," will help the three cities expand naturalization programs and other ventures dedicated to helping immigrants secure their financial footing through counseling, legal assistance and microloans.
Citigroup, the founding corporate partner, is contributing more than $1.1 million.
The initiative comes as the number of legal immigrants becoming citizens is on the rise. Last year, naturalizations in the U.S. increased to 779,929, up nearly 3% from 2012, according to the U.S. Department of Homeland Security, which oversees immigration.
In the New York metro area, naturalizations have increased at the greatest pace among metropolitan areas nationwide, up roughly 37% in 2013 compared with 2011. In the Los Angeles metro area, naturalizations climbed about 12% between 2011 and 2013, while in the metro region that includes Chicago, the number of naturalizations has remained stagnant, mirroring many other places nationwide.
"Citizenship is a powerful poverty-fighting tool because it brings huge economic benefits to families and to communities," New York City Mayor Bill de Blasio said. "More than that, it helps keep families together."
A report to be released Wednesday—from the Center for Popular Democracy and the National Partnership for New Americans, two nonprofit groups, and the University of Southern California—shows the economic benefit that citizenship brings to local economies.
According to the report, the increase in earnings to immigrants, who otherwise wouldn't have become citizens, is estimated to add between $1.8 and $4.1 billion over 10 years to New York's economy; between $1.6 billion and $2.8 billion in Los Angeles; and between $1 billion and $1.6 billion in Chicago.
Among the nearly nine million permanent residents nationwide who are eligible for citizenship, there are currently about 450,000 New Yorkers who are "one step away" from becoming naturalized, Mr. de Blasio said. Many haven't completed the process because of the cost, Mr. de Blasio said, but the new initiative will help them navigate the legal process and obtain financial assistance.
Chicago Mayor Rahm Emanuel said his goal is to make Chicago "the most immigrant-friendly" city in the country.
Almost half of all new businesses are started by immigrants, Mr. Emanuel said. "So, you can't be pro-small business and anti-immigrant," he said. "They're inconsistent."
Bob Annibale, global director of community development at Citigroup, said statistics clearly show poverty levels are much higher among foreign-born residents than those who have become citizens.
"So, there really is a value in helping people not only to build a national identity, but with that, their financial identity," Mr. Annibale said. "And that's sort of the role where we felt we could be part of this."
As part of the initiative, the Mayor's Office of Immigrant Affairs in New York City will issue a study on the economic impact of citizenship programs for mayors across the country in hopes of demonstrating the value of funding naturalization programs as a way to combat poverty.
"Immigrants are the backbone of our economy," Los Angeles Mayor Eric Garcetti said. "It's time we encouraged their successful integration into our social and political tapestry to continue boosting our economy and not stand in the way of it."
Source: The Wall Street Journal
Lingo still a barrier to relief
Times Union – August 7, 2013, by Jimmy Vielkind - Immigrant advocacy groups say it remains difficult to get access to...
Times Union – August 7, 2013, by Jimmy Vielkind - Immigrant advocacy groups say it remains difficult to get access to government services in languages other than English — nearly two years after Gov. Andrew Cuomo decreed that written and oral interpretation would be available the state’s six most-spoken foreign languages.
Cuomo signed an executive order that took effect last October mandating state officials to offer language assistance for speakers of Spanish, French, Italian, French Creole, Russian and Chinese. But the order’s scope was necessarily limited to state agencies, even though state-funded services like food stamps, driver’s licenses and unemployment benefits are administered by New York City or other counties.
The groups — including Make the Road New York, the Center for Popular Democracy and the Center for the Elimination of Minority Health Disparities at the University at Albany — visited government offices and surveyed people with limited English proficiency to develop a measure of compliance. In a report released earlier this week, they found that less than half the people who needed language assistance were able to receive it.
According to Nisha Agarwal, deputy director of the Center for Popular Democracy, the survey found 63 percent of citizens using state-operated facilities that are explicitly covered by the order were not successful in their quest to gain language assistance.
“The governor’s team has been very engaged on implementation, and we’re sympathetic to the challenges of getting an entire state apparatus to change,” said Agarwal. “That said, the results are by no means satisfactory, and we were quite disappointed that the state took the position that county-run agencies for state services were not within the ambit of the order. We feel it’s a pretty big gap.”
The Cuomo administration responded by saying that all covered state agencies are in compliance with this executive order
“This report paints an inaccurate picture of reality by relying on visits to county-run agencies that by law fall outside the executive order,” said Cuomo spokesman Richard Azzopardi. “Everyone should have the same access to their government, and we encourage counties to follow the state’s lead.”
Source
Video: Grandes bancos podrían beneficiarse con el muro de la frontera
Video: Grandes bancos podrían beneficiarse con el muro de la frontera
Mira el video aquí.
Language access order faces hurdles in implementation
Epoch Times – August 5, 2013, by Genevieve Belmaker - New York State residents with limited English language...
Epoch Times – August 5, 2013, by Genevieve Belmaker - New York State residents with limited English language proficiency still face problems with access to government services, according to a new study.
More than 2 million people in New York State have limited English proficiency (LEP), according to Make the Road New York (MRNY), an immigrant advocacy organization that has partnered with The Center for Popular Democracy to complete the study.
Despite the number of people with LEP and the 2011 executive order 26 issued by New York State Governor Andrew Cuomo for better provision of services, they still face many barriers accessing services.
Cuomo’s order requires that all state agencies that have direct public contact translate vital documents into the state’s top six LEP languages. The order also requires that interpretation and transportation services be provided in native languages if needed. But the study found two years later, that requirement has still not been fully implemented.
“There’s a growing number of cases where they are asking people to bring someone [for interpretation],” said Cornelia Brown, founder and executive director of the Multicultural Association of Medical Interpreters. “The one exception might be the Child Protective Services.”
Brown, who was speaking as part of a Monday, Aug. 5 conference call about the report, added that in many cases LEP people are asked to bring their own interpreters with no arrangement for reimbursement of any cost incurred.
In general, the report states that despite New York State’s indisputable position as a national leader in pro-immigrant policies, a “significant amount of work remains to be done to dismantle language barriers at government agencies that dispense key benefits and services.”
Some of the report’s key findings include that the majority of LEP New York State residents don’t get translated documents when trying to get access to state benefits and interpretation services. Despite the implementation shortfalls, most people who got translated materials or interpretation services said it was helpful.
To gather the data, MRNY and The Center for Popular Democracy worked with partner organizations across New York State starting in the spring of 2012 to survey LEP individuals in New York City, Long Island, Albany, Central New York and Buffalo.
Source
How Can We Combat Wage Theft And Protect Immigrant Workers?
Every year, millions of workers suffer from wage theft when employers or companies do not pay them what they are owed...
Every year, millions of workers suffer from wage theft when employers or companies do not pay them what they are owed.
Read the full article here.
Fed Officials Push Back Against Calls to Overhaul Central Bank’s Structure
Fed Officials Push Back Against Calls to Overhaul Central Bank’s Structure
Federal Reserve bank presidents are pushing back against a rising chorus of voices saying the central bank’s century-...
Federal Reserve bank presidents are pushing back against a rising chorus of voices saying the central bank’s century-old structure needs to be overhauled to reduce bankers’ influence over its operations and policies.
Presumptive Democratic presidential nominee Hillary Clinton and the party’s draft platform have echoed calls for change by left-leaning activists, a drive that could gain new attention this week during the party’s convention in Philadelphia.
At issue is the role played by private banks in the Fed’s 12 regional reserve banks, which supervise financial institutions, provide financial services and participate in the central bank’s monetary policy-making.
By law, private banks elect six of the nine members of each Fed bank’s board of directors, choosing three to represent the banks and three to represent the public. The other three are appointed by the Washington-based Fed Board of Governors to represent the public.
Critics say the setup creates an inherent conflict of interest, akin to the proverbial fox guarding the henhouse, and has resulted in too little diversity among the leadership of the Fed system.
“Common sense reforms—like getting bankers off the boards of regional Federal Reserve Banks—are long overdue,” Mrs. Clinton’s campaign said in May.
Fed leaders in recent public comments and interviews have defended the status quo as effective, though Chairwoman Janet Yellen said during congressional testimony in February “it is of course up to Congress to consider what the appropriate structure is of the Fed.”
Meanwhile, regional Fed bank officials have played down the potential for conflict of interest, noting that the directors aren't involved in bank supervision, and the directors who represent private banks don’t participate in choosing the Fed bank presidents. The officials also see value in having close ties to the banking community. Patrick Harker, president of the Philadelphia Fed, said most of the bankers in his district are from small firms, not the big financial institutions that can worry regulators.
“The banker from a small town in Pennsylvania provides incredibly important insight” about local conditions, and “I worry about losing that insight,” Mr. Harker said. He agreed bankers could provide input through advisory groups, but he said having them on his board, meeting every 15 days, provides a level of instant insight into the economy and financial system that would be hard to replace.
William Dudley, president of the New York Fed, told reporters in May, “The current arrangements are actually working quite well, both in terms of preserving the Federal Reserve’s independence with respect to the conduct of monetary policy and actually leading to pretty, you know, successful outcomes” in terms of hitting the Fed’s goals of maximum employment and low, steady inflation.
Another issue for some advocates of change is the regional Fed banks’ status as quasi-public, quasi-private institutions. The Fed board in Washington is a wholly government entity that ultimately oversees the regional Fed banks. But when private banks become members of the Federal Reserve system, they are required to buy stock, and in turn receive dividends from the Fed. So the private banks in a sense own the regional Fed banks, though they can’t transfer or sell the stock.
“It’s pretty indefensible for the Fed to be the only regulatory institution” in the U.S. “that’s owned by the industry it regulates,” said Ady Barkan, of the Center for Popular Democracy’s Fed Up Campaign.
Fed officials say the critics misunderstand the Fed’s ownership structure. Cleveland Fed President Loretta Mester said in an interview the quasi-private status of the regional Fed banks helps ensure the independence that is needed for good policy-making in an economically diverse nation. If the regional banks were made fully part of government, she worried, Washington’s power would grow, raising the risk of politics influencing the policy debate.
Ms. Mester said “yes, the banks have stock” in the Fed. “But that’s not owning the Fed in the sense of a corporation, right? It’s making sure that there’s representation from the district as part of the Fed structure,” she said.
Richmond Fed leader Jeffrey Lacker also worried making the regional Fed banks pure governmental entities might promote short-term thinking that would lead to bad policy outcomes.
Fed Up worked with former senior Fed staffer Andrew Levin, now a professor at Dartmouth College, on a proposal to make the Fed banks wholly government institutions, as are the central banks in all the major economies. His proposal also would eliminate the regional Fed board director slots reserved for bankers and have all the directors selected in a public process involving the Washington governors and local elected officials.
Mr. Levin said he’s somewhat mystified Fed officials appear to be rejecting almost all the major reform ideas now being debated. They “might not have much influence on the outcome if they wait too long to engage in the debate,” he warned.
Mr. Harker, the Philadelphia Fed president, worried “there are always unintended consequences anytime you make a change.”
But Mr. Barkan countered “it’s true the system could be made worse than it is now, but we think it could be made better.”
By MICHAEL S. DERBY
Source
10 hours ago
2 days ago