Tags: federal reserve | richard fisher | overhaul | lawmakers

Fisher Takes Aim at Lawmakers as He Proposes Own Fed Overhaul

Wednesday, 11 February 2015 09:08 AM


Federal Reserve Bank of Dallas President Richard Fisher blasted politicians seeking more influence over U.S. monetary policy and urged changes that would shrink the role for New York and Washington Fed officials.

Fisher derided legislation introduced by Republican Senator Rand Paul of Kentucky that would allow the Government Accountability Office to audit the Fed’s monetary policy decision-making.

“My suspicion is that many of those in Congress calling for ’auditing’ the Fed are really sheep in wolves’ clothing,” Fisher said in the text of his remarks prepared for delivery on Wednesday in New York.

“Having proven themselves unable to cobble together with colleagues a working fiscal policy or to construct a regulatory regime that incentivizes rather than discourages investment and job creation — in other words, failed at their own job — they simply find it convenient to create a bogeyman out of an entity that does its job efficiently.”

Fisher, who retires after 10 years as Dallas Fed chief on March 19, proposed his own set of reforms to the Fed’s institutional makeup, including stripping the office of the New York Fed president of its permanent Federal Open Market Committee vote on policy.

“Under the current structure, the president of the New York Fed is the FOMC’s permanent vice chair, which renders him the second-most-powerful person at the table, behind the Chair,” Fisher said. “I would rotate that position every two years to one of the other 11 Fed presidents.”

Re-Balance Votes

Under Fisher’s plan, six of the 12 regional bank heads would vote on the FOMC each year instead of five, to match the influence on policy of the six governors on the Fed Board in Washington, who have permanent votes, in addition to the seventh vote of the Fed chair.

“I would change it to balance out the division of power between the Federal Reserve Banks that are out in the field and among the people and businesses that operate our economy and have their own independent research staffs, and the Board of Governors, which is Beltway bound geographically and is briefed and guided by a single staff,” Fisher said.

Extending his criticism to current policy, Fisher said the FOMC’s reluctance to raise rates put it at risk of “monetary Alzheimer’s,” arguing wage inflation would pick up faster as unemployment continued to decline.

“Every single time the Fed has waited for full employment to be achieved before starting to withdraw accommodation, it has ended up driving the economy into recession,” he said.

“I hope we don’t forget the past and will remember that the wisest policy option has proven to be early and gentle interest rate increases as we approach full employment.”

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Federal Reserve Bank of Dallas President Richard Fisher blasted politicians seeking more influence over U.S. monetary policy and urged changes that would shrink the role for New York and Washington Fed officials.
federal reserve, richard fisher, overhaul, lawmakers
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2015-08-11
Wednesday, 11 February 2015 09:08 AM
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