Democracy Versus Bankers at the Fed


Dean Baker
Posted: 10/17/11 03:30 PM ET


The Federal Reserve Board has provided the basis for thousands of conspiracy theories in its near-100-year existence. These conspiracies have some basis in reality as can be seen by the Fed's recent moves on monetary policy. In the last two meetings of the Fed's Open Market Committee (FOMC), the Fed's key decision-making body, the members appointed through the political process unanimously supported stronger measures to spur growth and create jobs. By contrast, three of the five voting members appointed by the banking industry opposed further action.

This extraordinary split has not received the attention it deserves. It suggests that the financial industry is using its power at the Fed to try to block the course preferred by the appointees of democratically elected officials of both parties.