Seeing Red at the Fed

Of all the members of the Federal Open Market Committee, five members of the Board of Governors (usually seven, but two sets are currently empty) and twelve district bank presidents for a total of seventeen, how many were appointed under Democratic presidents?

Answer: There is just one, William Poole of the St. Louis Fed (though St. Louis is not currently a voting member of the FOMC). Note, however, that while the president nominates Federal reserve Board members, the district bank presidents are "appointed by the board of directors of the Bank, with the approval of the Board of Governors of the Federal Reserve System, for a term of five years." Thus, we can't really hold the president accountable for the choice of district bank presidents like we can for the choice of Federal Reserve Board members, and I don't want to imply that the Fed is driven by politics or ideology, because (now that Greenspan is gone?) it isn't. Still, it's interesting how many district bank presidents came into office under Republican presidents, although part of that is simply due to turnover and the fact that Bush is serving two terms.

But when it comes to the Board of Governors, the distribution is not so easy to dismiss - it is not what was intended when the system was set up. Board members serve 14 year terms, and one member's term expires every other January. That means a two-term president should, if things go as planned, appoint four of the seven members of the Board. As it stands now, Bush has appointed the five current members and has also nominated two more, though those nominations are being held up in the Senate until after the election. [One related note: I don't think there should be, but there have been questions about whether Ben Bernanke will be reappointed as Fed chair when his term expires in 2010. If he isn't, he does not have to step down from the Board, he can continue to serve out his term - until 2020 - as an ordinary Board member. It is traditional to resign is such a circumstance, but there is nothing that requires it. So one reason to keep an open seat is to ensure that, should the new president so desire, he or she can appoint someone who is not currently a Board member, i.e. someone from outside, as the new Chair. If all seats are filled and nobody is willing to step down, the Chair would have to be chosen from among the seven current Board members. Generally, however, turnover can be expected - see the current Board - so this isn't a large consideration.]

Board of Governors

• Ben Bernanke, February 1, 2006 (first: August 5, 2002), Bush
• Donald Kohn, August 5, 2002, Bush
• Kevin Warsh, February 24, 2006, Bush
• Randall Kroszner, March 1, 2006, Bush
• Frederic Mishkin, March 1, 2006, Bush

District Bank Presidents

• Boston: Eric: Rosengren, July 23, 2007, Bush
• New York: Timothy Geithner, November 20, 2003, Bush
• Philadelphia: Charles Plosser, August 1, 2006, Bush
• Cleveland: Sandra Pianalto, February 1, 2003, Bush
• Richmond: Jeffrey Lacker, August 1, 2004, Bush
• Atlanta: Dennis Lockhart, March 1, 2007, Bush
• Chicago: Charles Evans, September 1, 2007, Bush
• St. Louis: William Poole, March 23, 1998, Clinton
• Minneapolis: Gary Stern, March 16, 1985, Reagan
• Kansas City: Thomas Hoenig, October 1, 1991, Bush I
• Dallas: Richard Fisher, April 4, 2005, Bush
• San Francisco: Janet L. Yellen, June 14, 2004, Bush

Comments

[anne]

William Poole, by the way, happens to be a wildly conservative Republican, nominated by Bill Clinton to the annoyance of my father as a matter of balance when no balance was needed for an already conservative central bank.

[save_the_rustbelt]

I am trying to think of what impact a partisan Fed might have created?

Are you implying that Greenspan or Big Ben have twisted policy for political reasons? Were the low interest rates early in the decade partisan?

After these are economists, the purest of the intellectually pure, right? [ big wink ]

[anne]

Possibly a politically balanced Federal Reserve might have been more oriented to credit oversight and regulation, even if interest rate policy had remained the same. Also, I have often wondered about the 50 bases point Fed Funds rate increase in May 2000, which seemed needless an to have a political aspect as well as proving harmful.

[ken melvin]

What a mess. almost of another time, no?

[ddt]

check this out.
leaked video of Fed auditors examining collateral in the TSLF:
Leaked Fed Meeting

[dissent]

Some have argued one reason Greenspan kept rates so low for so long was to conceal the cost of the war. A credit boom lulled the American people.

Wasn't something like this considered the reason for the inflation of the 70's? Vietnam war spending that was financed by deficits, that was it.

[save_the_rustbelt]

ddt: wicked, one of my favorites (still have old man crush on Carrie Fisher)

I've been trying to figure out the apporach to issuing 2007 financial statements for some of these companies, espcially Bear Sterns.

says...

I remember William Poole's signed portrait of Reagan prominently displayed in his office.