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Home Publications Blogs Beat the Press George Will Is Upset Because Barney Frank Wants to End the Banks' Control Monetary Policy

George Will Is Upset Because Barney Frank Wants to End the Banks' Control Monetary Policy

Thursday, 29 September 2011 07:06

That's right, Representative Barney Frank, the ranking Democrat on the House Financial Services Committee, proposed legislation that would take away the votes that the banking industry has on the Federal Reserve Board's Open Market Committee (FOMC). As the FOMC is currently structured, 12 of the 19 members are essentially appointed by the banks, with 5 of the 12 voting at any one time.

George Will is outraged that Frank would take away the banks' direct control over the country's monetary policy. After all, if we followed Frank's logic, drug companies wouldn't be able to appoint commissioners to the Food and Drug Administration, phone companies wouldn't be able to appoint commissioners to the Federal Communications Commission, and airline companies would not be able to appoint commissioners to the Federal Aviation Authority.

Comments (9)Add Comment
Families Make Decisions by Command and Control - Not Markets
written by izzatzo, September 29, 2011 9:36
Any economist knows as does George Will that markets exist outside of and are independent of families as demonstrated in the works of Gary Becker.

Interference in appointment decisions made by The Finance Family amounts to socialism if not outright totalitarianism and should be addressed with sufficient Jimmy Hoffa concrete weight to keep the subject out of sight and mind forever.

Stupid liberals.
written by Moopheus, September 29, 2011 12:25
Right--bankers would have to control the appointment of governors the old-fashioned way: lobbying and bribery. It's not like anyone could actually get a position on the Fed board who wasn't bank-friendly anyway, even if they're supposed to represent the "public." (Yeah, I'm looking at you, Kathryn Wilde).
What does markets have to do with the Fed
written by Patrick Tchou, September 29, 2011 1:46
Markets exists outside of anyone's control. But, the Fed is set up by the Public to provide oversight and regulation to that portion of Banking that can affect the Public's financial well being. It makes no sense to set up such an institution and then have a large part of its control be in the hands of those to be regulated! Same for the SEC. Those who wish to be outside of this regulation can do so at their own risk, absent fraudulent representation of their actions.
written by benjie hiller, September 29, 2011 1:47
Have you read Retirement Heist by Ellen Schultz? Why hasn't this scandal gotten more publicity? Does she get it right?

Benjie Hiller
written by Ralph Musgrave, September 30, 2011 2:05

Re Izzatso’s objections to socialism, presumably he favours socialism for the rich: in the form of taxpayer funded bail-outs for Wall Street fraudsters and incompetents.

Re Benjie Hiller’s points about corporations plundering pension funds, this has been going on the UK for some time. See:

written by skeptonomist, September 30, 2011 9:50
The idea of the Fed actually came mostly from a group of big New York Bankers, and they convinced the government to go along. It's hardly surprising that it operates largely for the benefit of banks and the financial industry. What is surprising is that liberal economists have accepted that this institution is suitable for administering monetary policy, although they are continually being disappointed by the performance of its leaders. The formation of the Fed was inspired by the Panic of 2007 and it was supposed to prevent future panics. It failed to prevent the Panic of 1929-1933, and it prevented collapse this time only by bailing out the biggest banks. In between these times, the infrequency of banking collapses owed much more to laws passed by Congress, especially Glass-Steagall, than to any action by the Fed. It is very bizarre that any liberals continue to put their faith in the Fed at all.
written by skeptonomist, September 30, 2011 10:04
Panic of 1907
written by zinc, September 30, 2011 7:33
George Will, like Bill Kristol, is an American neoconservative political analyst and commentator, who has made so many wrong calls to have earned the right to be referred to as an "unreliable source". Has Will's view of the world, broadcast across the land for the last two decades, ever been right ?
Airlines Appointing FAA Commissioners?
written by John, October 01, 2011 7:36
Actually, while I wouldn't necessarily support or advocate it, it wouldn't be so bad to have Airlines appoint a fraction of the FAA commissioners. At least not as bad as having banks appoint Fed members. At least the airlines have the same interests as the rest of us, in safe air travel.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.