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Wednesday 14 August 2013

Why Reshaping the Federal Reserve is today an Absolute Must?

The Fed has enormous discretion in its decisions. It is entirely appropriate to demand that they be carried out with greater transparency and be subject to greater oversight.

To take it one step further, we believe that the very structure of the Federal Reserve system is so fraught with conflicts that it is "corrupt" and undermines democracy.

If the World Bank had seen a governance structure that corresponds to our Federal Reserve system, we would have been yelling and screaming and saying that country does not deserve any assistance, this is a corrupt governing structure.

In fact, if another country had presented a plan to reform its financial system, and included a regulatory regime that copied the makeup of the Federal Reserve system - "it would have been a big signal that something is wrong."

Further, the Fed banks have clear conflicts of interest, since the banks are largely governed by a board of directors that includes officers of the very banks they're supposed to be overseeing:

So, these are the guys who appointed the guy who bailed them out ... How is that not a conflict of interest?

Ziad K Abdelnour is the Author Of Economic Warfare Book (Secrets of Wealth Creation in the Age of Welfare Politics)

First ... how effective a regulator can the Federal Reserve be if it is unwilling to strive for good public policy through its regulatory powers?

Second, there is an inherent conflict in the manner in which regional reserve branch presidents are selected – in that representatives of the member banks select the regional president. It seems counterproductive, yet the banking system has provided case after case of regulated entities selecting their own regulator.

Third, the Federal Reserve has continually resisted efforts to engage in discussion on structural and governance reform at the System. Most recently, the Federal Reserve has rejected a White House request that it conducts a public review of its structure and operations. Despite a request from the administration that provided ample opportunity for the Federal Reserve to have input into its own reforms, the central bank has simply refused. It is because of this attitude that I argue that real financial regulatory reform cannot occur without an examination into the structure of this entity.

Fourth, and most importantly, the Federal Reserve has shown a repeated unwillingness to accept efforts to improve transparency for the System...

Read More: http://www.blackhawkpartners.com/reshaping-federal-reserve-today-absolute-must/

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