Wednesday, December 10, 2008

Treasury Now Partly Owns The Fed

Interesting observation from Lila Rajiva:

Member banks within each of the 12 districts of the Fed elect 6 of the 9 regional board members and the president for that district. Since the Treasury now intends to take minority equity stakes in some banks that it claims are struggling, (ostensibly for the purpose of preventing investors from pulling out), it will have partial control over the Fed. That means the Fed is now even less independent.

1 comment:

  1. They may as well get rid of the pretence of Fed independence.

    Recent research by academic economists into the Nixon 'Watergate' tapes indicate that the White House routinely 'pressures' the "independent" Fed.