Ten Ways to Combat Upward Redistribution of Income
Moyers & Co - January 1, 2015, by Dean Baker - The big gainers in the last three decades (aka the one percent) like...
Moyers & Co - January 1, 2015, by Dean Baker - The big gainers in the last three decades (aka the one percent) like to pretend that their good fortune was simply the result of the natural workings of the market. This backdrop largely limits political debate in Washington. The main difference is that the conservatives want to keep all the money for themselves, while the liberals are willing to toss a few crumbs to the rest of the country in the form of food stamps, healthcare insurance, and other transfers.
While the crumbs are helpful, the serious among us have to be thinking about the unrigging of the economy so that all the money doesn’t flow upward in the first place. Here are 10 ways in which we should be looking to change the structure of the market in 2015 so that all the money doesn’t flow to the one percent.
In all these areas changes will be difficult, since the one percent will use their wealth and power to ensure that the rules not be rewritten to benefit the bulk of the country. However, this list should provide a useful set of market-friendly policies that will lead to both more equality and more growth.
1. Expanded Trade in Medical Care
The Affordable Care Act extended coverage to millions of people and, for the first time, allows people the freedom to quit jobs they don’t like and still have access to insurance. Nonetheless, we still pay close to twice as much per person for our health care as people in other wealthy countries.
If our trade policy were not dominated by protectionists, it would be directed toward making it easier for qualified foreign physicians to practice in the United States, potentially saving patients tens of billions every year. Even with the federal government committed to protectionist policies, nothing stops state governments from seeking out lower-cost care for Medicaid patients in other countries. The savings, which can run into the hundreds of thousands of dollars in some cases, can be shared with beneficiaries.
2. Prescription Drugs
This is part of the healthcare story, but a big-enough part to deserve a separate mention. Patent monopolies can allow drug companies to charge prices that are 100 times higher than the free-market price. The hepatitis-C drug Sovaldi sells in the United States for $84,000. The generic version is available in India for less than $1,000. State Medicaid programs can pay to send patients to India, along with one or more family members, and still have tens of thousands of savings that can be shared with beneficiaries.
3. Wall Street Sales Tax
The financial sector continues to rake in money at the expense of the rest of the country, courtesy of bailouts, too-big-to-fail insurance, and being largely exempt from taxes applied to other industries. Even the IMF argues that the financial sector is undertaxed.
While most members of Congress and presidential candidates are too indebted to Wall Street to push for a financial-transactions tax, states can get a foot in the door. It is possible to tax the transfer of mortgages on property within the state. A modest tax of 0.2 percentage points won’t affect normal mortgage issuance, but it will discourage the shuffling of mortgages and raise some serious revenue. This money can be used to fund needed public services and, in part, to support lower taxes in other areas.
4. Limiting CEO Pay
CEOs are able to arrange paychecks in the tens of millions of dollars in large part because corporate directors are effectively paid off to look the other way. The incentives can be radically altered if directors stood to lose their stipends if a say-on-pay vote by the shareholders was defeated.
State governments can put this into law for corporations chartered in their state. Also, any corporation can put this rule into their own bylaws. Since fewer than three percent of pay packages are voted down, any director who is confident enough that they will not be in the bottom three percent should be happy to support such a change in bylaws.
5. Limiting Pay at Nonprofits
Nonprofit organizations like universities, hospitals, and charities are hugely subsidized by taxpayers. Since most of their contributions come from people in the top income bracket, the ability to deduct charitable contributions effectively means that taxpayers are paying 40 cents of every dollar a rich person contributes.
Since taxpayers are out for much of the cost, it seems only fair to put some rules in place. (Actually, we already do.) How about a pay cap of $400,000 for any employee of a nonprofit? This is twice the pay of a cabinet officer. If a university or other nonprofit can’t find competent people who are prepared to work for twice the pay of a cabinet secretary, perhaps it is not the sort of organization that taxpayers should be supporting.
States can also get into the act on this one. Most states offer special tax treatment to nonprofits. They could apply the two-times-a-cabinet-member’s-pay rule to the nonprofits within their state.
6. Applying Sales Tax to Internet Sales
Jeff Bezos has become one of the richest men in the world because he was successful in expanding Amazon into a huge retailer that doesn’t have to collect the same sales taxes as corner grocery stores. There is no excuse for giving special exemptions to Amazon and other Internet retailers. The states that don’t yet tax Internet sales in their state should move quickly to do so. It makes no sense to subsidize giant retailers like Amazon at the expense of traditional mom-and-pop retail outfits.
7. Democratizing the Sharing Economy
Start-ups like Airbnb and Uber have quickly turned into multi-billion-dollar businesses, in large part by evading the regulations that apply to their traditional competitors. The plan here should be to modernize the rules for taxis, hotels and other outposts of the “sharing” economy and be sure they apply to everyone equally. You don’t get to operate an unsafe taxi driven by an alcoholic just because it’s ordered over the Internet.
In the case of Airbnb, local governments could quickly add some new competition by having local websites where people could list available rooms without paying fees to Airbnb. The advantage to the cities is that they could be sure that these rooms met fire safety and other requirements. Then the only people who listed on Airbnb would be people renting fire traps or other illegal units or who were too ill-informed to save themselves the Airbnb commission. (This gives “sharing” economy a whole new meaning.)
8. The Overvalued Dollar
Our economists are learning and have discovered the problem of secular stagnation. This means that many economists now recognize that the economy can suffer from a persistent problem of inadequate demand, leading the economy to run at below-potential levels of output and to have excessive unemployment.
Unfortunately, most economists still don’t feel they can talk about the most obvious cause of the lack of demand: the country’s large trade deficit. The annual deficit is currently more than $500 billion (at three percent of GDP). This has the same effect on the economy as if consumers were to massively cut back their annual consumption by $500 billion and instead put this money under their mattress. The lost demand translates into more than six million jobs.
The obvious solution is to reduce the value of the dollar against other currencies in order to make US goods and services more competitive internationally. The value of the dollar is a matter that is determined at the national policy level. In principle the United States could be negotiating for a lower-valued dollar in a big trade agreement like the Trans-Pacific Partnership. Instead it is pushing for stronger patent protection for Merck and Pfizer, stronger copyright protection for Disney and Mickey Mouse, and a system of business-friendly courts that can override laws in the United States and elsewhere.
9. Shorter Work Years and Work Weeks
If we can’t directly increase demand in the economy through lowering the value of the dollar, we can still increase the number of jobs by reducing the amount of time that people work on average. This is the secret of Germany’s economic miracle. It has had slower growth than the United States, yet it has seen a huge increase in employment in its recession recovery. The average work year in Germany has 20-percent fewer hours than in the United States.
One of the policies that has helped bring about job growth in Germany is work sharing. This policy encourages companies to cut back hours instead of laying off workers. Workers are compensated for their lost wages through the unemployment insurance system. Most states have work-sharing programs as part of their unemployment insurance system. The compensation rate is generally lower in the United States than in Germany (typically 50 percent, compared with 60 to 80 percent in Germany), but it still beats losing a job.
Other policies that go in the same direction are paid family leave and paid sick days. These policies are important in their own right but can help better divide the available work among those who want jobs. Another great feature of these policies is that we don’t have to wait for the president and Congress to take action. They can be implemented at the state and even local level.
10. The Federal Reserve Board
The last and possibly most important item on the list is the Federal Reserve Board. It will be coming under pressure from the Wall Street types to raise interest rates. The point of higher interest rates is to slow the economy and keep people from getting jobs. The Fed would do this because more jobs will mean that workers have more bargaining power and would be in a position to raise wages. In short a Fed move to raise interest rates is very directly about keeping workers from getting higher wages. (Most workers have only been able to achieve real wage gains when the unemployment rate has been low.)
Fortunately, there are efforts to apply some pressure in the opposite direction, most importantly by the Center for Popular Democracy. They aim to let the Fed governors in Washington and presidents of 12 district Fed banks know that people who care about jobs are watching the Fed’s actions. This should make it harder for the Fed to take steps to deliberately throw people out of work and reduce workers’ bargaining power.
That’s my list of the top 10 places where progressives can focus in 2015 on restructuring the economy in ways that prevent income from flowing upward. The list is hardly exhaustive, and I left out some obvious important areas, like strengthening unions, because everyone should know them. Let’s hope for a good year and some real progress in turning the economy around.
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Dem lawmakers hear demands for ‘reparations’; but let’s call it THIS so nobody gets ‘uncomfortable’
Leaders of the Black Lives Matter group received widespread applause from a crowd of Democratic state legislators,...
Leaders of the Black Lives Matter group received widespread applause from a crowd of Democratic state legislators, Friday, for suggesting the government award the black community reparations for “systematic discrimination in law enforcement.”
“Thinking about decriminalization with reparations—the idea is we that have extracted literally millions of dollars from communities, we have destroyed families,” said Marbre Shahly-Butts, deputy director of racial justice at the Center for Popular Democracy, during her address at the State Innovation Exchange in Washington, D.C. “Mass incarceration has led to the destruction of communities across the country. We can track which communities, like we have that data.”
“And so if we’re going to be decriminalizing things like marijuana, all of the profit from that should go back to the folks we’ve extracted it from,” she continued.
The focus of state legislators should be “state budgets and then reparations,” Shahly-Butts said.
“‘Reparations’ makes people kind of uncomfortable, so we can call it ‘reinvestment’ if you want to. Use whatever language makes you happy inside,” she said.
Fellow panelist Dante Barry, executive director of the Million Hoodies Movement for Justice, also recommended some type of “reinvestment” to help black youth and said New York City would be better off investing $100 million in the black community rather than hiring more police.
“In terms of response around black youth unemployment, it gets back to this whole piece around reinvestment,” Barry said. “What would you do with $100 million? How would we better use that money to provide jobs for unemployed youth, to provide housing, to have mental health access. … It’s really about how do we rethink some of our budgetary needs and how we’re putting power behind the way that we can really incorporate reinvestment in communities.”
If there were one policy he would want state legislators to prioritize, Barry said it would be a ban on all guns on campus.
Source: Biz Pac Review
How the Labor Movement is Thinking Ahead to a Post-Trump World
How the Labor Movement is Thinking Ahead to a Post-Trump World
The American labor movement, over the past four decades, has had two golden opportunities to shift the balance of power...
The American labor movement, over the past four decades, has had two golden opportunities to shift the balance of power between workers and bosses — first in 1978, with unified Democratic control of Washington, and again in 2009. Both times, the unions came close and fell short, leading, in no small part, to the precarious situation labor finds itself in today.
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Communities Lose When HUD Sells Loans to Wall Street
The Hill - October 2, 2014, Rachel Laforest & Keven Whelan -James Cheeseman and his mother, Constance, have lived...
The Hill - October 2, 2014, Rachel Laforest & Keven Whelan -James Cheeseman and his mother, Constance, have lived in their Rosedale, New York home for the past five years. Like many Americans, they struggled during the recent economic downturn and have been trying to get a modification on their mortgage.
The bank that held their mortgage JPMorgan Chase, agreed to provide borrowers like them relief under a multi-billion dollar settlement with the Justice Department last year. But the Cheesemans' mortgage was insured by the Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development (HUD). And before they could work out a deal with Chase, the bank had the FHA sell their loan to a new investor as part of a program, called the Distressed Asset Stabilization Program or DASP.
The program is supposed to have a dual purpose. First, the federal agency hopes to be able to use the funds received by DASP to right the balance sheet of the Federal Housing Authority’s mortgage insurance program. Second, the program is intended to “encourage public/private partnership to stabilize neighborhoods and home values in critical markets.”
According to HUD’s own data and reports, DASP is meeting the first objective and failing miserably at the second. Almost all loans sold through the DASP program went to for-profit firms and only a tiny handful (around 3 percent) of families whose loans were sold ended up with deals that kept them in their homes.
For homeowners like the Cheesemans, that failure has real-life consequences. When HUD, through DASP, sold their mortgage to another servicer, the Cheesemans lost their protections under the FHA program mandating an effort to modify the mortgage. Their new servicer, BSI Financial, was under no requirement to consider a mortgage modification. BSI doesn’t even participate in HAMP, a post-bailout program for major banks that facilitates loan modifications to keep families in their homes. The result? The Cheesemans and thousands of other homeowners throughout the country are at serious risk of losing their home.
A recent report, Vulture Capital Hits Home: How HUD is Helping Wall Street and Hurting Our Communities, published by the Right to the City Alliance and Center for Popular Democracy cited serious problems with DASP. First, the current structure of most DASP auctions considers only the highest bid without weighting the bidder’s track record of good outcomes for homeowners and communities. Secondly, the groups found that the current outcome requirements and reporting structure fail to hold purchasers accountable. Third, the current pre-sale certification phase does not ensure that the FHA modification process has been followed.
Organizations called “Community Development Financial Institutions” with a track record of helping consumers stay in their homes stand ready to be a part of an improved version of this program. If a reformed DASP program incentivized it, investors with a social purpose could also make money by negotiating win-win, sustainable mortgage modifications with homeowners.
But community-friendly organizations can’t even get to the table with the auction overheated by well-heeled Wall Street firms and private equity “vulture capital” firms.
When the highest bidder places profits first, homeowners and neighborhoods come last. The result: more and more American homeowners losing their homes to unnecessary foreclosures and more and more corporate landlords leasing homes at rates few of these former homeowners, let alone anyone else, can afford.
All of this is the consequence of a program developed and managed by HUD, a federal agency with a stated mission to advance affordable housing and sustainable communities.
This week, HUD plans to sell off another 15,000 American homes to Wall Street investors. These are 15,000 families, 15,000 neighbors and 15,000 futures. Many if not all of these homeowners will lose their share of the American dream as a result of these auctions.
HUD can and should halt this week’s sale and must implement the necessary reforms that have been proposed by a range of community and advocacy groups.
As we consider the results of the economic collapse and what has been called by some a recovery, it is important to note once again that many neighborhoods, especially in communities of color, haven’t bounced back.
Too often our government has put the interests of Wall Street above the needs of struggling families. HUD can do better by fixing the “Distressed Assets” program now.
Laforest is executive director of the Right To The City Alliance, based in New York City. Whelan is National Campaign director of the Home Defenders League. He lives in Minneapolis.
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Activist groups march in Pittsburgh for People's Convention
Activist groups march in Pittsburgh for People's Convention
Hundreds of protesters attending the People's Convention in Downtown Pittsburgh took about two hours to march Friday in...
Hundreds of protesters attending the People's Convention in Downtown Pittsburgh took about two hours to march Friday in hot, humid weather from the David L. Lawrence Convention Center to Station Square.
The march, which started at 2:30 p.m., made stops at the U.S. Steel Building and the Allegheny County Courthouse on Grant Street before ending at Station Square.
Marchers carried hand-painted, cardboard busts of presidential candidate Donald Trump and UPMC CEO Jeffrey Romoff, orange butterflies on bamboo poles, and banners bearing the slogan, "still we rise." Chants rose above the din of after traffic as prosters cried phrases like, "No justice, no peace," and "Ain't no power like the power of the people, because the power of the people don't stop."
At Seventh and Grant Street, police and marchers talked. One woman took a selfie with an officer — typical of the friendly exchanges between protesters and police.
Jose Lopez, of Brooklyn said he attended the march with Make the Road New York, a nonprofit that advocates for immigrant rights.
"It's been really great. We have a lot of working people with us. A lot of our folks don't have the wages or the opportunity to meet the community and get off the block. So it's great to be here."
Pittsburgh police maintained a visible presence along the parade route. Officers on motorcycles and bicycles assembled before the march.
The march has been planned for some time, but it comes less than 24 hours after five Dallas police officers were fatally shot during a march protesting the recent shootings of black men in Minnesota and Louisiana by police officers.
Seven other Dallas officers were injured in an incident President Barack Obama said "horrified" America.
Erin Morey, of Mt. Lebanon, came out to show support, particularly for Martin Esqivel Hernandez, an undocumented immigrant who was arrested at his Pittsburgh home and faces deportation.
"Every voice should be heard," said Morey, whose son Max accompanied her. "I want to support an open dialogue."
The progressive groups involved in the Pittsburgh march were hosted by the Center for Popular Democracy. They voiced concerns regarding immigration, labor, environmental and civil rights causes. The group stopped at the courthouse, but officials there had already sent civilian workers home for the day and closed the building at 2:30 p.m.
"Right now, it's going great," said Pittsburgh police Chief Cameron McLay, who walked along with the marchers, shaking hands and chatting with reporters.
"I expected to find the atmosphere more tense," he said.
McLay said the officers he'd spoken with remained positive.
"I'm really, really proud of them," he said. "Right now, they're so focused on the task before them, they're not thinking about feelings," he said.
Some marchers delivered a sharper message with a red banner that said "fire killer cops."
Among others, the groups marched by the offices of the Federal Reserve, Republican U.S. Sen. Pat Toomey, the University of Pittsburgh Medical Center, Bank of New York Mellon and even train tracks, which the groups say carry crude oil, which is targeted by climate change opponents.
Toomey stayed away from his Station Square office on Pittsburgh's South Shore. Instead, the Lehigh Valley Republican held a news conference on the North Shore to express his support for law enforcement.
"It was not a good place to be," Toomey said of Station Square.
Toomey described the viral images of fatal police shootings of black men in Louisiana and Minnesota as "very disturbing," and said both incidents need to be thoroughly investigated. But the shooting rampage that left five police officers dead and seven others wounded in Dallas "has no possible justification," Toomey said.
"The vast majority of officers are good, decent, honest and hard-working individuals," Toomey said. "What is completely wrong is the narrative that somehow cops generally are the bad guys. That narrative is something I have been pushing back on because it's wrong."
Toomey's election opponent, Democrat Katie McGinty, also shared support for police and called for thorough investigations of the shootings in Louisiana and Minnesota.
In messages posted to Twitter, the city police department offered condolences to Dallas police and Gov. Tom Wolf ordered flags to be flown at half staff.
In Greensburg, the police department posted a lengthy message on Facebook that served, in part, to remind readers that police officers are human beings who are part of a larger community.
Pittsburgh Bishop David Zubik held a Mass at noon for about 70 people at Saint Mary of Mercy Church in Downtown to pray for peace and reconciliation in light of the Dallas shootings.
"Yesterday was Dallas, Wednesday was Baton Rouge, Tuesday was St. Paul. And Monday, July 4th our own Wood Street. Violence continues," Zubik said during the sermon.
"Where will it be today, where will it be tomorrow? Will it stop? Do we want it to stop?" he said.
Zubik compared violence to a disease and said that it rips families apart. He asked for attendees to think of the communities affected by violence across the nation, as they are neighbors and that it was senseless to direct blame at "one group of individuals." He said "it's imperative to tear down our own prejudices."
Zubik reminded the group that there's no competition for "whose life matters most," invoking the Black Lives Matter movement. The service ended with a prayer for first responders and others involved in public safety.
"I thought the sermon was incredible," said Marie Atria of Mt. Lebanon, "this is all terrible and it has to stop."
The Church said it was a normal attendance for a midday Friday mass. Pittsburgh has a potential for violence, but the "overwhelming response from the citizens of Western Pennsylvania is they're working for peace," Zubik said.
Pittsburgh Mayor Bill Peduto and Allegheny County Executive Rich Fitzgerald released a joint statement regarding the violence in Louisiana, Minnesota and Texas:
"Today, our nation is in mourning for the deaths of so many in our community. We are hurt, angry, confused and in pain as we struggle to cope with the violence plaguing us. Our answer to the violence in our community cannot be more violence. Pittsburgh's strength has always been in coming together to solve issues and supporting each other in times of need. We rely on that strength and we need it now more than ever.
"We have great faith that all of us – residents, communities, law enforcement, activists – have the capacity to come together to heal from our pain and anger, no matter how difficult that may be for us. We can do more to honor the lives of those who were killed by working together to stop the violence and have a more peaceful community."
Peduto called for a "peace summit" to be held next week, but a date hasn't been determined.
Reporting by Max Siegelbaum, Megan Guza, Justin Merriman and Matthew Santoni.
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Five takeaways from Colorado's campaign finance reports
Five takeaways from Colorado's campaign finance reports
KUSA - Candidates and campaigns had to file their latest round of finance reports to the Secretary of State’s office...
KUSA - Candidates and campaigns had to file their latest round of finance reports to the Secretary of State’s office Monday.
Here’s what we learned from reading those reports.
1) Tobacco companies have deep pockets.
The No Blank Checks in the Constitution committee has raised about $5 million to keep the tobacco tax in Amendment 72 from passing.
That’s more money than any other campaign has raised so far this cycle, and it all comes from one source: Altria Client Services.
The company is a subsidiary of Altria (formerly Phillip Morris) -- one of the world’s largest tobacco companies.
2) ColoradoCareYES is struggling.
The group pushing universal health care through Amendment 69 raised just $10,000 during the last filing period.
That brings their total to about $320,000. In contrast, Coloradans for Coloradans, has raised nearly $4 million this cycle.
In addition to its fundraising woes, the campaign has also suffered from some surprising opposition. Democratic Gov. John Hickenlooper and Sen. Michael Bennet both oppose the amendment. And so does the liberal group Progress Now.
3) Most of the minimum wage money is coming from out of state.
The group Colorado Families for a Fair Wage wants you to vote to raise the state’s minimum wage to $12 an hour.
But the majority of the $2.3 million it's raised comes from groups in New York and California.
The campaigns biggest donors are Civic Participation Action Fund, The Fairness Project and The Center for Popular Democracy Action Fund.
The campaign against raising the minimum wage is called Keep Colorado Working.
Most of its money comes from industry groups like the Hospitality Issue PAC, which had a Denver address.
That might make you think it’s local money fighting the minimum wage campaign, but the PAC’s funded by national companies like McDonald’s and the National Restaurant Association.
4) The physician assisted suicide campaign is raising and spending some serious cash
Yes on Colorado End of Life Options has raised about $4.8 million to pass Proposition 106, which would let terminally ill patients purchase medications to end their lives.
The campaign’s biggest expenditure is $2.9 million to Blue West Media for advertising. That means we’re likely to see a lot of ads about the proposition between now and Nov. 8.
5) Democrats are outraising Republicans in three key Colorado Senate races.
The winners of Colorado Senate districts 19, 25 and 26 will determine whether Republicans retain control of the chamber.
If Republicans lose all three races, the Democrats will likely gain control of the entire legislature.
All the Democratic candidates are ahead of their opponents when it comes to dollars raised so far.
The biggest gap is in Senate District 19. Incumbent Republican Sen. Laura Woods is $70,000 behind her challenger, Rachel Zenzinger.
We will have to wait and see whether more money translates into more votes
By 2016 KUSA
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Regional Feds’ Head-Hunting Under Scrutiny Over Insider Bias, Delays
New York/Washington. Efforts to fill top positions at some US Federal Reserve regional branches are casting a spotlight...
New York/Washington. Efforts to fill top positions at some US Federal Reserve regional branches are casting a spotlight on a decades-old process that critics say is opaque, favors insiders, and is ripe for reform.
Patrick Harker took the reins as president of the Philadelphia Fed this week, in an appointment that attracted scrutiny because he served on the committee of directors that interviewed other prospective candidates for the job he ultimately took.
The Dallas Fed has been without a permanent president for more than three months as that search process stretches well into its eighth month. And the Fed’s Minneapolis branch abruptly announced the departure of its leader, Narayana Kocherlakota, more than a year before he was due to go, with no replacement named to date.
The delays and reliance on Fed employees in picking regional Fed presidents can only embolden Republican Senator Richard Shelby to push harder for a makeover of the central bank’s structure, which has changed little in its 101 years.
A bill passed in May by the Senate Banking Committee that Shelby chairs would strip the New York Fed’s board of its power to appoint its presidents. And it could go further, given the bill would form a committee to consider a wholesale overhaul of the Fed’s structure of 12 districts, which has not changed through the decades of shifting US populations and an evolving economy.
The bill is part of a broader conservative effort to expose the central bank to more oversight, and some analysts saw the Philadelphia Fed’s choice as reinforcing the view that the Fed needs to open up more to outsiders.
Nine of 11 current regional presidents came from within the Fed, a proportion that has edged up over time. Twenty years ago, seven of 12 were insiders.
“The process seems to create a diverse set of candidates in which the insider is almost always accepted,” said Aaron Klein, director of a financial regulatory reform effort at the Bipartisan Policy Center.
Since it was created in 1913, the central bank’s decentralized structure was meant to check the power of Washington, where seven Fed governors with permanent votes on policy are appointed by the White House and approved by the Senate.
The 12 Fed presidents who are picked by their regional boards usually vote on policy every two or three years, and they tend to hold more diverse views.
Former Richmond Fed President Alfred Broaddus told Reuters the regional Fed chiefs have more freedom “to do and say things that may not be politically popular” because they are not politically appointed. “On the other hand, there is the question of legitimacy since they are appointed by local boards who are not elected.”
“Tone deaf”
Two-thirds of regional Fed directors are selected by local bankers, while the rest are appointed by the Fed’s Board of Governors in Washington.
Critics question how well those regional boards — mostly made of the heads of corporations and industry groups meant to represent the public — fulfill their mission.
Last year, a non-profit group representing labor unions and community leaders organized by the Center for Popular Democracy, urged the Fed’s Philadelphia and Dallas branches to make the selection of their presidents more transparent and to include a member of the public in the effort.
Philadelphia’s Fed in particular proved “tone deaf” in its head-hunting effort, said Lou Crandall, chief economist at Wrightson ICAP in Jersey City, New Jersey.
Harker was a Philadelphia Fed director when the board started looking to replace president Charles Plosser, who left on March 1, and he was among the six directors who interviewed more than a dozen short-listed candidates for the job, according to the Philadelphia Fed.
But on Feb. 18, Harker floated his own name, recused himself from the process and a week later his colleagues on the board unanimously appointed him as the new president.
While the selection follows Fed guidelines and was approved by its Board of Governors, it raised questions of transparency and fairness.
“The Philadelphia Fed’s search process might have made perfect sense in a corporate environment, but is obviously problematic for an official institution,” said Crandall.
The board’s chair and vice chair, Swathmore Group founder James Nevels and Michael Angelakis of Comcast Corp, respectively, declined to comment, as did Harker.
Peter Conti-Brown, an academic fellow at Stanford Law School’s Rock Center for Corporate Governance, and an expert witness at a Senate Banking Committee hearing this year, proposed to let the Fed Board appoint and fire regional Fed presidents or at least have a say in the selection process.
In the past, reform proposals for the 12 regional Fed banks have focused on decreasing or increasing their number and their governance.
Changes to the way the regional Fed bosses are chosen could strengthen the influence of lawmakers at the expense of regional interests.
For now, delays in appointments of new chiefs force regional banks to send relatively unknown deputies to debate monetary policy at meetings in Washington, as Dallas and Philadelphia did last month when the Fed considered raising interest rates for the first time in nearly a decade.
The Minneapolis Fed still has time to find a new president before Kocherlakota steps down at year end.
“For now the Fed criticism is just noise, mostly from Republicans,” said Greg Valliere, chief political strategist at Potomac Research Group. “But once the Fed begins to raise interest rates … then the left will weigh in as well.”
Source: Jakarta Globe
Inside the Avengers Cast’s One-Night-Only Performance of Our Town
Inside the Avengers Cast’s One-Night-Only Performance of Our Town
The Avengers, and friends, assembled in Atlanta on Monday night, though without their usual armor, shields, and...
The Avengers, and friends, assembled in Atlanta on Monday night, though without their usual armor, shields, and superpowers. The event, dreamed up by Scarlett Johansson, brought together some of the Marvel Cinematic Universe’s biggest stars—all in town filming Avengers: Infinity War at Atlanta’s Pinewood Studios—for a stage reading of Thornton Wilder’s theater classic Our Town, a benefit for hurricane relief in Puerto Rico.
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Sorry: You Still Can't Sue Your Employer
Sorry: You Still Can't Sue Your Employer
From Applebee's to Uber, employers require workers to waive their rights to class-action lawsuits—but there's something...
From Applebee's to Uber, employers require workers to waive their rights to class-action lawsuits—but there's something cities can do to help them.
Read the full article here.
‘Shut This Office Down’: 128 Arrested As Anti-Kavanaugh Protesters Visit Republican Senators
‘Shut This Office Down’: 128 Arrested As Anti-Kavanaugh Protesters Visit Republican Senators
The Women’s March and the Center for Popular Democracy spearheaded a mass arrest action to kick off a week of protests...
The Women’s March and the Center for Popular Democracy spearheaded a mass arrest action to kick off a week of protests in support of Dr. Ford, whose allegations against the Supreme Court nominee have sparked turmoil.
Read the full article here.
1 month ago
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