The increasingly politicized Federal Reserve Bank is getting politicized, and its Chairman, Janet Yellen, and her Vice Chairman, Stanley Fischer, are upset over financial deregulation.
They’re…misguided. Here’s Yellen’s plea for retaining current, irrelevant and unuseful regulations:
Already, for some, memories of this experience may be fading—memories of just how costly the financial crisis was and of why certain steps were taken in response.
Here’s her deputy’s pretense of superiority:
[O]ne can understand the political dynamics of this thing, but one cannot understand why grown, intelligent people [would] reach the conclusion that [should] get rid of all the things you have put in place in the last 10 years.
What one cannot understand is why grown, intelligent people would reach the conclusion that the age of “all the things” is a useful measure of their continued efficacy. However, the bureaucratic turf protecting is patently clear.
We’re no longer in a national-level financial crisis; the regulations put in place to attempt to mitigate that long-expired crisis no longer are appropriate. What is appropriate is for the Fed and that portion of its management that—properly—is apolitical to take steps to help it identify in advance the next national-level financial crisis and to identify—in top-level, general outline form—steps that would seem to be useful to reduce that crisis’ onset and to mitigate the effects of what does arise despite that reduction.
It’s important, too, for the Fed’s apolitical management team to understand that no two financial crises will be alike, and so appropriate pro- and reactive step suites will need to be unique to those crises. The typical Government one-size-fits-all solution will be destructive, not constructive.
We don’t need a Federal Reserve Bank management team that puts its bureaucratic imperatives ahead of the national financial weal.