Political pressure can be felt, even in heady Regional Federal Reserve Bank boardrooms. Richard Fisher, President of the Dallas Fed, is concerned about montezing federal debt. I'll leave it to economic experts to wrestle with deflation, inflation, and money supply. But something struck me about the WSJ article. It stated:
Voices like Mr. Fisher's can be a problem for the politicians, which may be why recently there have been rumblings in Washington about revoking the automatic FOMC membership that comes with being a regional bank president. Does Mr. Fisher have any thoughts about that?This is nothing new, he points out, briefly reviewing the history of the political struggle over monetary policy in the U.S. "The reason why the banks were put in the mix by [President Woodrow] Wilson in 1913, the reason it was structured the way it was structured, was so that you could offset the political power of Washington and the money center in New York with the regional banks. They represented Main Street."Now we have this great populist fervor and the banks are arguing for Main Street, largely. I have heard these arguments before and studied the history. I am not losing a lot of sleep over it," he says with a defiant Texas twang that I had not previously detected. "I don't think that it'd be the best signal to send to the market right now that you want to totally politicize the process."
If any FOMC member truly supports the people's interests, they could feel severe pressure. It's interesting the fight is over framing "populism" and "politicizing the process."
Power is as power does. President Obama offers populist rhetoric and corporatist implementation. I'm not sure where Mr. Fisher stands, but he's a voice at the table.
Update 6-29-15: Richard Fisher will serve the people's interest as board member of AT&T and senior advisor to Barclays, which acquired Lehman Brothers after the Fed loaned Lehman $138 billion.