The structure of the Federal Reserve is such that positions are staggered, and appointments usually come along only every so often:

The seven members of the Board of Governors of the Federal Reserve System are nominated by the President and confirmed by the Senate. A full term is fourteen years. One term begins every two years, on February 1 of even-numbered years. All terms end on their statutory date regardless of the date on which the member is sworn into office.

Consider this Fed factoid: Due to a combination of several resignations and upcoming re-appointments, a few expired terms, and the ordinary appointments, Barack W. Obama has an extraordinary chance to reshape the FOMC.

Note this Washington Post article from December, 2008:

“In January 2010, Obama can either reappoint or replace Chairman Ben S. Bernanke when his term expires and make the same decision about Vice Chairman Donald L. Kohn when his term ends in June of that year. Fed governors serve a 14-year term, though in practice most leave after a few years.

Thus within 18 months of taking office, Obama will likely have appointed five of the seven Fed governors. The central bank is designed to be independent from politics, so a president’s best chance of influencing how the Fed will regulate banks or respond to economic changes is through these appointments.”

What makes this a cause for concern is the bad advice on all things economic that has been Bush Obama has been getting from the bankster twins, Summers and Geithner.

>

Hat tip Matt!

>

Source:
Obama Takes First Shot at Reshaping Fed by Naming Board Member
Neil Irwin
Washington Post, December 19, 2008; Page D01

http://www.washingtonpost.com/wp-dyn/content/article/2008/12/18/AR2008121801695.html

Board Members

http://www.federalreserve.gov/aboutthefed/bios/board/default.htm

See also:
Bernanke Set to Defend Record as Reappointment Debate Begins
Scott Lanman
Bloomberg, June 23 2009

http://www.bloomberg.com/apps/news?pid=20601087&sid=aUBTI6OxeEVA

Category: Federal Reserve, Politics

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

59 Responses to “Obama to Dramatically Reshape FOMC”

  1. FromLori says:

    Grt th Fnl Nls n th Cffn pndd n by crk frm Chcg r Kny wh rlly knws h rfss t prvd prf nywy pndd n by srpr thf n chf.

    ~~~

    ED: You have been disemvoweled

  2. krice2001 says:

    What gives FromLori? A little OT? I thought the top was the FOMC. Listening to too much Rush L again??? I believe this is a financial/economics blog.

  3. This is about Fed appointments and monetary policies — not a forum for crazy rants by lunatic bitches.

    Go sell crazy somewhere else.

  4. Marcus Aurelius says:

    Dramatically reshaping the FOMC would require some non-banking industry appointments. As with Congress, appointment of random people from the phone book would most likely result in less damage to the economy than letting the “professionals” have their way(s) with it.

    OT: I’m going to start a band called lunatic bitches. Our first single will be F.C.U.K. the F.O.M.C.

  5. dead hobo says:

    New eyes = new ideas.

    I’m not smart enough to debate the daily operations or wisdom of a lot of what the Fed does. But I am smart enough to know they need to be overhauled when it comes to basic ideas and basic analysis. They seem to ignore the connection between funds available to invest and commodity prices. While the CFTC and SEC both abdicate their responsibility to maintain an orderly investment market with respect to investments that affect commodity prices, the Fed is an incompetent backstop.

    In summary, the Fed doesn’t understand inflation so it redefines it in a simple minded way and puts that definition in a box that has solid walls that won’t be moved. Asset bubbles are a conundrum that can’t be solved, so they should be ignored. Wages and prices are public enemy number one when they get out of control on the upside. It’s OK if they go out of control on the downside due to their poor understanding of cost behavior.

    I’d like to see 100% turnover ASAP. Iran has their crazy mullahs. We have out mullahs of finance. Our’s may not be crazy, but they can be stupid.

  6. Marcus Aurelius says:

    Should read: As with Congress and our laws . . .

  7. call me ahab says:

    BR-

    don’t sugarcoat it- tell us how you really feel- Fromlori drops in from time to time- but it almost looks like spam- so I don’t think most people pay attention- although I do remember her dropping the word obamageddan in her posts – so I knew where she was coming from right away

    RE FOMC-

    are selections vetted? And if so- is their any real scrutiny that would keep somebody from serving- as in- let’s say- someone purposely didn’t pay their taxes [snark]

    ~~~

    BR: The nice thing about WordPress is you can set any commenter to be either a) moderated or b) auto-spam filtered

  8. dh–

    you go w/ : “Ours may not be crazy, but they can be stupid.”

    can we give this, whole, “stupid”/”incompetent”-thing a rest?

    if you’ve, ever, been around any of these people, “stupid” is the last thing that would come to mind.

    if you think their actions/explanations, from the POV of your ‘best interests’, sound “stupid”, then you better guess again as to their Intent..

  9. [...] will Obama appoint at the FOMC? Jump to Comments I think Rubin is available. : Thus within 18 months of taking office, Obama will likely have appointed five of the seven Fed [...]

  10. Moss says:

    The Fed needs to understand that inflation is caused by the supply of money. With all the trading vehicles and the array of speculative financial players the price of commodities is less a function of supply and demand than had been the case. Way to many ‘buyers’ of commodities have no intention whatsoever of ever actually using the product in any economic sense.

    100% turnover would be a step in the right direction.

  11. call me ahab says:

    I though this was intersting analysis from Jesse’s Cafe Americain-

    “As long as the government is able to generate debt, deflation is a highly unlikely outcome. And when the government reaches the practical limits of debt creation, the underpinnings of the currency give way and the economy tends to collapse in a stagflationary slump . . . There are no predetermined outcomes. Deflation, stagflation and hyperinflation are not ‘normal’ but are certainly possible if the central authority is permitted to abuse the real economy and the money supply for protracted periods of time.”

    it appears that he does not buy into the deflation idea but I love that last line-

    “central authority is permitted to abuse the real economy and the money supply for protracted periods of time.”

    all the theories and subsequent manipulations do cause real damage- especially when the USG tries to paper things over so the common folk are unaware

    “The lie can be maintained only for such time as the State can shield the people from the political, economic and or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.” Joseph Goebbels

  12. dead hobo says:

    Mark E Hoffer Says:
    June 23rd, 2009 at 8:54 am

    dh–

    you go w/ : “Ours may not be crazy, but they can be stupid.”

    can we give this, whole, “stupid”/”incompetent”-thing a rest?

    reply:
    ————–
    No.

    They may be educated and they may do a lot of smart things, but they frequently do things that defy common sense and logic and are of such monumental stupidity that public derision is not only called for, it should be a requirement. Maybe then they will take notice and become a little more reflective.

    Anyone can make a mistake. The only people who don’t make mistakes are people who don’t do anything. It takes a concentration of effort and a significant lack of reflective interest to be Uncle Stupid.

  13. call me ahab says:

    please forgive my multiple spelling errors

  14. Marcus Aurelius says:

    Moss:

    The inflation/deflation debate goes on, largely due to theoretical vs. real-world observations mixed in with a dose of confusing semantics (supply and demand be damned). As I see it, here’s an appropriate analogy for our current situation:

    One entity collects and controls all water rights and resources. The entity withholds water from from everyone else, and calls it a drought (despite record rainfall). They keep it all in a well guarded reservoir, behind a earthen dam.

    You can guess the rest.

  15. jc says:

    I have been disappointed with O’B’s financial policy continuation of Bush the Failure but these appointments will seal his fate, he can’t keep referring to this as his inherited mess much longer. Like they said in the 70′s if you aren’t part of the solution then you’re part of the problem. Turbo Timmy is the poster boy for that.

  16. jc says:

    Is Turbo Timmy’s public/private toxic partnership stillborn or has he contracted it completely to PIMCO to cherry pick?

  17. call me ahab says:

    MEH Says-

    “if you think their actions/explanations, from the POV of your ‘best interests’, sound “stupid”, then you better guess again as to their Intent..”

    @ DH-

    I think hoffer is only saying that what the FOMC does is very deliberate when setting policy and the outcome they are looking for has nothing to do with your best interests or the best interests of most Americans in general

    hoffer – correct me if I’m wrong

  18. Mr. C. Cheese says:

    Barack W. Obama…… Yo Barry, when/where did you lose the love?

  19. no, ahab, that’s it..

  20. manhattanguy says:

    As I said yesterday, look for a bounce today in the markets. I will look to short positions when S&P touches 200 dma. We might trade sideways for sometime. Time will tell.

  21. dead hobo says:

    call me ahab Says:
    June 23rd, 2009 at 9:09 am

    I think hoffer is only saying that what the FOMC does is very deliberate when setting policy and the outcome they are looking for has nothing to do with your best interests or the best interests of most Americans in general

    reply:
    ————-
    I’m also quite sure they mean well. They aren’t terrorists. They’re just wrapped up in dogma that need to be looked over with fresh eyes and fresh ideas. I see a group of old men who are as rigid in their ways as Iran’s crazy mullahs are in theirs.

    The Fed rescue programs intended to create emergency liquidity were probably pretty good ideas. I’m not smart enough to say for sure, but not doing them would have probably left a bigger problem. I’m just wrapped up in their idiotic belief that asset inflation and asset bubbles are an impossible problem to solve from their perspective, thus they’re ok to ignore.

  22. Marcus Aurelius says:

    OT:

    A little innovation and American ingenuity to brighten your day:

    http://www.liveleak.com/view?i=a80_1241043860

  23. The Curmudgeon says:

    @DH, I generally agree w/ your position on the Fed, except this:

    “I’m not smart enough to debate the daily operations or wisdom of a lot of what the Fed does”

    But you are. And so are we (the sheeple), if we’d just take the time to understand. The one notion that needs to be discarded through all this is that economic “scientists” at the Fed are our intellectual betters. They are not. They may be brilliant people individually, but collectively they are as stupid as any herd of humans ever is. And subject to the same motivations, like debasing the currency, that all central bankers everywhere are subject, since the first days of central banking history.

  24. call me ahab says:

    DH Says-

    “I’m just wrapped up in their idiotic belief that asset inflation and asset bubbles are an impossible problem to solve from their perspective, thus they’re ok to ignore.”

    it isn’t that they ignore them- they encourage them- asset bubbles help them out of their immediate problems and give an illusion of prosperity and wealth- I say why don’t we do the things we need to do to become a net exporter, a nation of savers and thrift, turn things around a bit so we have a real economy based on real things, real production and real wealth

  25. though, dh’s take, as he puts it, above, only serves to, further, muddy murky waters.

    public “catcalling” of these characters accomplishes Nothing. If one is Interested in a wholesale shift in FedRes ‘policy’, I would think that they’s be Interested in, for a Change, Auditing the Federal Reserve, for starters.

    maybe, we would do well to remember some of JFK’s words: “the very word ‘Secrecy’ is repugnent..”
    http://www.brainyquote.com/quotes/quotes/j/johnfkenn136324.html

    also, we should remember, past all fancy subterfuge of “Government appointed” apparatchiks at the, public-facing, head of the FedRes, it bears, ultimately, no obedience the USG.
    http://thetruthwins.com/archives/ron-paul-and-the-federal-reserve

    dh, sometimes, one has to “check one’s Premises”. you know, for starters..

  26. dead hobo says:

    The Curmudgeon Says:
    June 23rd, 2009 at 9:26 am

    @DH, I generally agree w/ your position on the Fed, except this:

    “I’m not smart enough to debate the daily operations or wisdom of a lot of what the Fed does”

    reply:
    ————–
    Thank you for your support. To a large extent, what you say is true. Economic is a rather simple social science. Making it mathy adds a layer of complexity, but doesn’t create certainty. Economics is really just the analysis of cause and effect. Adding a layer of politics makes economists employable. Adding a layer of math makes them look like priests. Maybe collecting a lot of macro statistics for decision making purposes is where it gets difficult.

  27. dead hobo says:

    call me ahab Says:
    June 23rd, 2009 at 9:28 am

    it isn’t that they ignore them- they encourage them- asset bubbles help them out of their immediate problems and give an illusion of prosperity and wealth-

    reply:
    ————
    yes, they do. Asset bubbles are off limits as they are considered to be incomprehensible.

  28. dead hobo says:

    Mark E Hoffer,

    I would love to see the Fed audited. I suspect it will never happen because of some dogmatic beliefs and resistance from our financial mullahs.

  29. call me ahab says:

    money line from hoffer’s 2nd link-

    [Geithner] “vigorously defending the plan to give huge new power to the Fed, and is arguing that the Fed will not need any oversight as they exercise these new powers as it is “very important” that the Federal Reserve “preserve its independence”.

    man- if that isn’t scary I don’t know what is- especially after reflecting on this other money line-

    “In fact, when Congress asked the Fed where all the bailout money went, the Fed told Congress that they did not have to answer.”

    complete audit needed ASAP

  30. dh–

    their, the FedRes’, gag has been well known for a long time, even before ‘the FedRes’..

    see: http://www.apfn.org/apfn/reserve.htm

    and, to your point about “Econ”/ ‘making it mathy’– no doubt, it’s part of the Wizard’s curtain..

    though, to that end, you may care for http://www.mises.org

    from the praxeological POV..
    http://www.thefreedictionary.com/praxeology

  31. call me ahab says:

    another keeper (same link)

    “Senator Chris Dodd recently said that giving the Federal Reserve more power is like rewarding a son with a “bigger, faster car right after he crashed the family station wagon”.

    no doubt- what the hell is everyone smoking? Why reward them with more power? When they set the stage for the bubble/collapse economy

  32. Greg0658 says:

    beaver dams and the freshly soaked trees to chew for fun and building anew with

    imo our presidential advisors and all those other titans of industry do what they do for each of their interests … most of us are along on their ride … hopefully they are not driving drunk, tired or pre-occupied … with proper redistribution methods their ride will make our ride ok enough .. and that is our problem with our balance … too many new players in to quick imo

    The modern definition of terrorism is inherently controversial. The use of violence for the achievement of political ends is common to state and non-state groups

    The word “terrorism” is politically and emotionally charged,[1] and this greatly compounds the difficulty of providing a precise definition. A 2003 study by Jeffrey Record for the US Army quoted a source (Schmid and Jongman 1988) that counted 109 definitions of terrorism that covered a total of 22 different definitional elements.[2]

    http://en.wikipedia.org/wiki/Definition_of_terrorism

    On the commodity trading ie Moss .. I’m with ya – I think thats a problem ie 2nd incomes for people and messin with commerce balance

  33. dead hobo says:

    Mark E Hoffer,

    I’ve seen the Mises pages and have a few pdfs on my pc for reading someday. It’s not light stuff. I’m not in a position to form much of an opinion on him at this time, although others also speak highly of him.

  34. I-Man says:

    This frightens me. I was up to late to be optimistic about who the appointments will be. I doubt one of them will be Barry Ritholtz. Or Ron Paul.

    I used to be all revolutionary back in college, then conceded ineffectual-ness. Now I want to channel that mojo against the Federal Reserve… these dudes keep me up at night.

  35. I-Man says:

    @ MEH:

    Thanks for the links breddah. Good stuff… same vein of thought that I was channeling…

    These cats scare the shit out of me… and no one Knows much if anything about them and how they shape, I dont know… whats the word… “Economic Reality” perhaps.

    I will enjoy reading that and watching the clips… Thanks.

  36. dh–

    Mises, his ownself/his works, are one thing, mises.org is another.

    see: http://mises.org/story/3475 as an ex.

    really, they cover Economics w/o the “mathiness”-Smoke-screen..

    as well, for easier going, check out H. Hazlitt
    http://www.mises.org/store/Economics-in-One-Lesson-P33.aspx

  37. VennData says:

    Bring back Greenspan…

  38. VennData says:

    …was just kidding up there.

    I think Volker could help out in this department.

  39. Swampfox says:

    I always thought it was Hussein and not Wussein.

  40. dh–

    also, if you have not seen this book: http://www.amazon.com/Creature-Jekyll-Island-Federal-Reserve/dp/0912986212

    it’s, well, worthwhile..

    and, if you order it from here ( **spontaneous advertising alert ): http://www.midasresources.com/Products.html
    they’ll send you the book & a 1908-1935 U.S. Silver Dollar for U$D 26.45 (MN add sales tax).
    ~~

    I-Man,

    may be it’s something like this: ht tp://ww w.elyrics.net/read/b/bob-marley-lyrics/babylon-system-lyrics.html

  41. I-Man says:

    @ Mark:

    “Tell the children the Truth.”

  42. Wes Schott says:

    proposing to give greater power to the FED is insane and not for the greater good of US – as I noted on the anouncement of the new plan – WTF

    more power to the FED and the Treas is simply more power to the Banksters

    that’s whos interest the FED is looking out for, don’t you think for one minute they are looking out for the greater good.

    like those CAP LOCKS, ahab ;-)

  43. I-Man,

    way to comb that from the thicket of his lyrics..it has, forever thus, been the only way out, of any Box..

    as an aside, this: http://www.financialsense.com/fsu/editorials/andros/2009/0619.html

    and the rest of his, Andros’, work, I find to be useful..

  44. Transor Z says:

    I agree with Curmudgeon. If people who read this blog can’t understand the Fed’s inner workings, something is wrong. “Leave it to the experts” isn’t exactly a pro-democracy slogan. “Experts” very quickly devolve into “Your betters.”

    At a minimum, there has to be accountability in the form of public trials/hearings/audits on the issue of whether the trusted experts performed in good faith and met minimum professional standards.

    The famous legal term is “res ipso loquitur” — the thing speaks for itself. When Chernobyl melted down, obviously somebody fucked up. When a barrel flies out of a warehouse window and hits you in the head, obviously somebody in the warehouse fucked up. The rule of law provides concepts to hold even “black box” situations accountable for failure. When a credit bubble forms under the watch of a quasi-governmental financial body that regulates interest rates, somebody fucked up.

    It emphatically is not rocket science. The Wizard of Oz scam is as old as Caesar’s astrologers or the first tribal “holy man” who told the chief that “God speaks to me — and only to me. I’m happy to interpret for you.”

  45. call me ahab says:

    transor z-

    good points

  46. Mannwich says:

    @Transor & Curmudgeon: Totally agree with you guys, but let’s face it – - much of our so-called “economy” is making things overly complicated and shrouding things in mystery so that we can bring in the “experts” to decipher and fix things for We the Sheeple (sorry Thor). I’m afraid that by the time most of the public wakes up to what is going on/has gone on, it will be far to late to put Humpty Dumpty together again (hat tip, leftback). That’s just human nature. People simply don’t take (or have, or make) the time to care about these things until it’s too late.

  47. The Curmudgeon says:

    “It emphatically is not rocket science. The Wizard of Oz scam is as old as Caesar’s astrologers or the first tribal “holy man” who told the chief that “God speaks to me — and only to me. I’m happy to interpret for you.”

    Amen, TZ…

    I submit to the board that is not possible for the Federal Government to give more power to the Federal Reserve Bank. That would be like man giving God more power. When all the power is already yours, no one can give you any more. But the FedRes might allow it to seem it is subordinate to the FG by outwardly and humbly accepting more power, knowing all the while it has all the power in the world and couldn’t possibly gain any more.

    In the meantime, Goldman Sachs expects it to have a “record year” for bonuses. But really, what does that have to do with anything?

  48. Wes Schott says:

    The Bond Market may have more power than the Fed….

    good v evil

    playing out at a theater near you

  49. The Curmudgeon says:

    “The Bond Market may have more power than the Fed….”

    That was kind of my point with the reference to GS…the Fedres is more powerful than the Fedgov, but that’s because it is basically a conduit for the real power of bankers and bond traders.

    I’m not sure, though, it is a tale of good v evil. Mostly just powerful v weak; slave v master; freedom v tyranny, etc. Whichever party proves ultimately the most powerful will create a narrative that makes it appear that “good” won. But it won’t play with the Navajo.

  50. Thor says:

    Manwich – “We the Sheeple (sorry Thor)” Don’t be sorry, unless you want to be sorry for making me spit my coffee all over my desk. That’s another term you should copyright ;-)

  51. I-Man says:

    It is a battle of control… the big question is, and always has been…

    Can the markets be controlled?

    Optimist I-Man: NO. That is like dropping a stone in a raging river, you can disrupt the flow for a mere second, before the river regains control in its dominant thrust for the path of least resistance.

    Cynical I-Man: Seriously??? Just look around. Dont kid yourself. Run from this rigged game and get back to the small scale agrarian life of the ancients.

  52. Thor says:

    Would I be correct in assuming that the consensus here is that Bernanke will not be renominated?

  53. Wes Schott says:

    Fed is an evil creature from some damn island off georgia

    Bond Vigilantes are the good guys, no?

    the question is where the hell are they? is that a hoof stompin stampede I hear off in the distance kemosabi?

  54. DL says:

    All these appointments by Obama are more likely to be bullish for commodities than bearish.

    But we’ll see.

  55. DL says:

    Thor @ 12:01

    If Summers really wants the job, I suppose “O” will give it to him.

  56. Porsche87 says:

    So who is left from GS that can be appointed without showing too much favoritism? Or maybe they will switch to PIMCO. Either of these would certainly show where Obama is really headed.

  57. BG says:

    BR, I agree with the last sentence of your post. I have never been a fan of the Geithner or Summers. It has to be especially tough for Volcker to play second fiddle to those two dick-weeds. They are nothing more than a conduit back to the financial elite who basically want to set all rules financial and keep the public – poor and ignorant. No Wall Street outsider can honestly “invest” the way things are now. Wall Street is nothing more than Las Vegas – East playing with tax-payer money. Unlike those bastards, I don’t have an infinite supply of capital if I fuck up. If I “invest” and lose, then it stops with me.

    More importantly, I feel Obama is blowing it if he does not take this opportunity at this point in time to restructure and reform the regulatory body of the US. Any blind fool knows that the US is on an unsustainable path and the FED will eventually lose all credibility around the world and at that point it is truly over for all the games being played on Wall Street & in the Capitol. IMO, Obama needs to make about 85% of Wall Street a boring semi-predictable/traditional market and let the high-rollers go off and do their own thing without a net.

  58. Transor Z says:

    OT, this link was posted over at Zero Hedge. It’s the video of Chris Whalen et al’s appearance before the House Banking, Housing and Urban Affairs Committee yesterday. Chris Whalen’s statement is at 116:30. Henry Hu’s explanation of why Goldman was an “empty creditor” in the AIG debacle — and thus able to “truthfully” say they had no “material exposure.”

    I don’t know much about CDS and I found the last 30-40 minutes to be extremely interesting/informative. Great overview of the utility of credit default swaps and the downsides.

    http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.LiveStream&Hearing_id=34ee16e5-5bf4-4bb1-85db-d05d911c08a0