Lawmaker moves to 'democratize' Fed rate-setting

[Judi Lynn]

Source: Agence France-Presse

Lawmaker moves to 'democratize' Fed rate-setting
– 2 hrs 48 mins ago

WASHINGTON (AFP) – A US lawmaker proposed a bill Tuesday which he said would make the Federal Reserve's interest rate-setting "more democratic" by removing from the process Fed governors with private-sector links.

Democratic Representative Barney Frank suggested that five of the central bank's 12-member panel which sets US interest rates, the Federal Open Market Committee (FOMC), were more beholden to private-sector banking interests than to the public.

Frank's office said he was submitting legislation that would exclude the five -- who are chosen to lead regional Fed units by the private financial institutions of each region -- from voting on rate decisions.

"Under current law, more than one-third of the votes cast are made by regional Federal Reserve representatives -- people who are neither appointed by the president nor subject to Senate confirmation," Frank said in a statement.



Read more: http://news.yahoo.com/s/afp/20110503/pl_afp/usbankcongressrate_20110503135919

[sinkingfeeling]

1. Won't pass, but thanks Barney.

[yurbud]

2. a painfully necessary move--just get rid of them all together, or the fed itself for that matter

[On the Road]

3. Not a Good Idea for the Fed Controlled by Politics

it would just exacerbate the boom-and-bust cycle. What a Fed Chairman should be doing is taking away the punch bowl just when the party is getting good. Greenspan was too late the last time, but no politician is ever going to do that.

There might be other ways to address the underlying concern -- for example, you could add outside members to the board to have a say in the rate-setting meetings.