Sallie Mae could afford to absorb the losses from its private loan business as, essentially, a marketing cost of snagging more lucrative loans. In a 2007 internal note, quoted in Illinois’s lawsuit, Sallie Mae described its strategy of using subprime loans to “win school deals and secure F.F.E.L.P. and standard private volume,” a reference to the Federal Family Education Loan program that generated most of the company’s profits.
In the debate for student loan cancellation, comments on the articles (one example) tend to be focused on chastising the borrower. But there is another side that is ignored: the parties that benefit from the status quo.
(See the federal student loans page for more discussion.)
Who Benefits from Student Loan Interest?
All these entities feast at the trough of student loan interest:
State and federal governments (get a cut of interest payments), essentially a tax. The federal government took in U.S.$70.3 billion (not including the payments from the Federal Family Education Loan Program (essentially Navient holds many of these loans, like mine.)
Student loan servicers, especially Delaware-based Navient (creator and seller of student-loan asset-backed securities (SLABS). Navient’s CEO, Jack Remondi, has a compensation package worth about US$8 million (2021 proxy, page 64)) Navient also likely advocated Congress Members to exclude commercially held FFEL from the CARES Act. This exclusion was notable and hurtful to these borrowers.
Al Lord, former CEO of Sallie Mae, which spun off Navient, became a multimillionaire by helping to create the student loan system that takes money from the working classes to benefit the rich and powerful.
Colleges and universities (endless tuition and fee increases)
Wall Street (banks and mutual and hedge funds that buy SLABS).
The red is debt Biden has canceled. A bit difficult to see. This doesn’t even factor how much the blue (remaining student debt) has grown since Biden took office due to mostly private loans not being covered under the moratorium. pic.twitter.com/ApEaucBB4a
These monied interests are against needed loan reform that will slow/eliminate the flow of this interest (that is, benefit the immiserated borrower).
For example, Credible (owned by Fox Corporation) had an advertorial in Fox Business stating how the federal government somehow “lost money” during the student loan moratorium. (Is the student loan a tax?) In the same ad, however, Credible shills its student loan refinancing programs.
Also, note carefully the words of both Biden and, recently, Pelosi. (California billionaires Steven and Mary Swig are close to Pelosi) The beneficiaries of interest also make political donations/bundle donations.
The exploited, abused “borrower” is fleeced to support this immoral system. Congress (including Biden) wrote the rules and set the interest (high, 8.25% for Federal Family Education Loans (FFEL), for example, way higher than the Federal Funds rate (at the time of this post, 0.25)) that lock borrowers into decades of misery (no reduction of interest, little-to-no possibility of bankruptcy, and payments that service interest more than principal).
I ride the train to work one day per week, with a transit subsidy. I see a few people evading the fare gate.
I recall that Metro offered non fare rides during the height of the pandemic. It worked well. So, the issue of fare gate evasion leads me to reflect on what is the purpose of our Metro system.
A Reflection: My Experience with Poverty
But first, a personal reflection. I have been a faithful Metro rider (subway and bus) since high school. Moreover, I enjoy using the system. It gets me where I want to go, as I prefer to take the train and bus rather than use a car whenever feasible.
I also know the deep pain and shame of long-term unemployment/precarious work. I was stuck in this abyss from 2013 until 2018, despite a commitment to education and work.
None of it mattered when Congress and President Barack Obama decided to gut the federal workforce with the cruel sequester. I lost nearly all my savings. In 2018, I fell to my last $100, and I broke out into a cold sweat. Furthermore, I remember not having enough cash flow to take the bus or the subway or walk into the supermarket.
If I did not have loving parents, I would have been forced out onto the street. It is an experience I will never forget. I will never be able to forgive the policymakers that caused my suffering (and provided very little assistance when I needed it).
For example, I received 52 weeks of unemployment. However, I was out of work with no help for 209 weeks! I applied for over 1,000 jobs and received only a handful of interviews.
The United States: A Potential to be Great, Hobbled by a Love of Cruelty and Violence
The United States has the potential to be great, but at its social core is a stubborn love of cruelty, shame, and exclusion. This cruelty is expressed in neutral sounding policy that ultimately leads to wicked outcomes. If you are poor, you can aspire to higher education. However, you have to use student loans, which leave the person with lifelong debt.
Another example, the United States has chosen a policy path that has preferred limitless police violence to achieve “compliance”. After questionable police recruitment and abysmally short “training” that emphasizes patterns that justify an excusable escalation of violence–up to and including killing–police officers are placed into service with members of the public.
These police officers with a badge and a plethora of weapons have a license to kill from the Supreme Court and Congress. If killing or maiming occurs because an “untrained” citizen makes a move that mimics a training pattern, for which the training response demands maiming or killing, police post-tragedy will “investigate” based on adherence to its inhuman training. When the police conduct aligns with the so-called training, the awful result is called “justifiable”. The victim is loaded up with blame (while simultaneously deflecting blame from US policymakers’ preference/tolerance of cruelty/violence).
The Philando Castile situation was a tragedy, developed by reliance on tickets for revenue.
Policymakers choose to fund police budgets without limit (including pushing military equipment down) while reducing or eliminating all manner of policies that foster a better quality of life:
Social services
Broader transit subsidies
Job guarantees
Homeownership/rental subsidies
Funding for recreation
Better parks
Better social bonds with our fellow citizens.
Papers on fare gate evasion, rely heavily on a punitive response rather than addressing the broader question–should governments provide further, substantial financial support to the people who live in this country?
For example, a 445-page book, Measuring and Managing Fare Evasion, National Academies of Sciences, Engineering, and Medicine. 2022. Measuring and Managing Fare Evasion. Washington, DC: The National Academies Press. Systemic discrimination in law enforcement of transit fares is not addressed, and ultimately minimized, until page 187.
WMATA policymakers hastily decided on a regimen of fines. A person is financially stressed, so the current fare structure verges on unaffordable, but that person must get to work. What if you make $7.25 per hour with an on-call work schedule? Recall that the National Capital Area is among the areas with an extremely high cost of living. Or, if a person is stuck in long-term unemployment with little to no savings (like I was)? You are trapped in a terrible position.
With the cruel reality that exists, however, we must ask the question–is an evaded fare gate worthy of
a potential visit to the jail,
a ruined record, that encourages exclusion from employment
The intensive care unit (ICU), or
The cemetery/crematorium?
I feel that WMATA officials responded too harshly to an issue that requires deeper thinking. Should Metro be a public service? Are the fares set too high? Can all users of the system be provided with a substantial transit subsidy?
To be fair, Metro Transit Police have avoided George Floyd, Philando Castile, level of controversy to date. But continued focus on police “enforcement” will bring a “critical incident event” to the WMATA system.
Reducing everything to profit and loss essentially erodes public service. Indeed, the extreme focus on “profit” has led corporations to raise prices for everything so that the Chief Executive Officer can meet his or her “performance goals”.
The concerns of the people who live here are discarded as unimportant. And, we have an “inflation” result.
The Federal Reserve Chairman, Jerome Powell, a multimillionaire, decided that there must be widespread unemployment among the poor and middle class. He, his family, and his friends will endure none of it.
The politicians in this area, the Mayor of the District of Columbia, the Governors of Maryland and Virginia, have been silent in explaining the terrible results that will come from Federal Reserve policy. Or, watch the CNBC television series, “American Greed” to see the wickedness that results from a sole focus on “profit”.
WMATA: A Public Good and Public Service
I urge WMATA policymakers and the governments of the District of Columbia, Maryland, and Virginia to focus more on what is the purpose of our Metro system. I think a broad transit subsidy is preferential to a fine, which is the start of a pathway to violence and personal ruin, financially and literally.
Introduction: The Board’s OMWI Office Started after a Loss at the D.C. Circuit in 2011
Whenever I read the Report to the Congress on the Office of Minority and Women Inclusion (OMWI), I am reminded of the Artis v. Greenspan case. (I urge prospective and current employees to read the D.C. Circuit case and to search Artis v. Greenspan on the Internet and on this blog.)
On January 11, 2011, the D.C. Circuit issued an opinion that was against the Federal Reserve (Fed or Board) stating that the plaintiffs had presented sufficient information for the Fed’s EEO Office to start an investigation (nearly 2 decades before).
Also on January 11, 2011, the Fed announced that it was creating an Office of Minority and Women Inclusion. The EEO Director, Sheila Clark, who was named in the Artis opinion, was named to lead the OMWI office.
Sheila Clark’s letter to the EEOC (printed in the Auerbach book, page 123).
I become irritated reading these OMWI reports because the Board never acknowledges its Jim Crow reality: the agency hates to have black people as employees. It shows in the low performance management program, or PMP, ratings for black employees. The Artis case took 18 years to resolve, largely because of Fed intransigence. In addition, Professor Robert Auerbach wrote a book about the Fed, “Deception and Abuse at the Fed,” in which chapter 8 detailed the Fed’s anti-black stances.
In 2021, the report detailed Chairman Jerome Powell’s reaction to the police-officer killing of Mr. George Floyd. Notably, the Board’s terrible history of racial and sex discrimination was not discussed.
Artis v. Greenspan/Bernanke/Yellen. An apology and corrective action are due to the former plaintiffs and all former and current black Board employees.
Diversity Report and the institutional bias to issue lower ratings to black employees.
Dr. Claudia Sahm’s detailed report of her mistreatment as a Ph.D. economist.
Sheila Clark was involved in the abuses and the Board is still silent on the systemic discrimination issues at the Board. This alone speaks volumes as to the intent of the Board.
Sheila Clark provided testimony to the House Financial Services Committee, which was not mentioned in the report. (I wrote a critical post about it.)
The Board must address the injustice of following “colorblindness” in macroeconomics. The United States is not “colorblind“. The U.S. system favors the white majority population.
While Chairman Powell did more substantive work in the diversity and inclusion area, ultimately it was for issues external to the Board. The Board continues to ignore its own serious problems. For Sheila Clark and ultimately the Board Chairman to submit these reports without a full accounting of Fed’s discriminatory past and present is beyond disgrace.
Unlike in 2020, an analyst can locate the link for the OMWI materials. Notification that the report was issued is missing. I know about it because I have been looking for it. So the Board is still not doing its best to ensure that this report is known like the Board does for its economics-related materials.
Regardless of whoever is the director of OMWI, the one person that is accountable for the diversity and inclusion policies of the Fed is the Board Chairman, who is, at the time of this post, Jerome Powell. Jerome Powell appears to be extremely lax in this area. He has a Presidential commission; Sheila Clark does not.
As a result, Chairman Powell must take the lead and provide directives to make the Fed improve. If a multimillionaire like Chairman Powell cannot get the job done, the situation is hopeless.
Sidebar: Claims that “America Is Not a Racist Country” Are Wicked–Denial of Systematic Discrimination and the Effects on Non-White People
Tim Scott, a Senator from South Carolina had the nerve to proclaim that “America is not a racist country.” Vice President Kamala Harris affirmed Scott’s statement while offering an empty semantic clarification that deflects to individuals that express racial animus (which gives succor to wicked “colorblindness” and systematic discrimination policy).
Both statements are wicked in that the effect of policy to treat Black people as second-class citizens is assigned to people who proclaim white supremacy (the ku klux klan and so on). The corrosive effect of systematic discriminatory policies–such as redlining, highway construction, property deeds, Joe Biden’s 1994 crime bill, and more–are ignored.
Uncle Tim Scott has perfected the art of sycophantic bootlicking. He’s a master step n fetch it artist and cunning white supremacy apologist, who demonstrated his buck dancing skills in front of the entire world.
“Hear me clearly, America is not a racist country”
At the Federal Reserve, Black people have suffered systematic injustice, as shown in Dr. Robert Auerbach’s book “Deception and Abuse at the Fed,” chapter 8, as well as in the Artis case. Even in recent years, the Fed (and other federal financial agencies) assigns lower performance ratings to Black employees, starting the process of removing these employees from employment. Vice President Harris’s statement does nothing for those who suffer from this cavalier and tolerated discrimination.
As you can see with my blog post, the Fed is exceptionally stubborn in correcting its own anti-Black policies.
(I ignore the word “racist” as it is a nebulous term that people with power can define however they want. Such is the power of white hegemony. The better term is racial abuse, receiving discriminatory treatment based on the color of one’s skin or membership in a minority group in the society.)
The Diversity and Inclusion Activities of the Fed: More Substantive Yet Willfully Ignores Systemic Discrimination within the Board
Chairman Powell commendably did much more tangible and substantive diversity and inclusion work (see page 14 of the report). However, that work was entirely focused on matters external to the Board or on forming committees. Chairman Powell did not mention any work on addressing the Board’s systematic discriminatory policies and practices. This particular time seems to be most relevant for such a discussion.
The Board decided to re-institute a diversity and inclusion strategic plan.
The ODI program director (Sheila Clark) provides the Fed Chairman and the governors with regular briefing sessions (page 4 of the report).
The report states that ODI works with Employee Relations (page 4 of the report). An interested reader must review the fact situation in the Artis case. This particular collaboration is not necessarily for the employee’s benefit.
Moreover, Dorey stated that “her managers discussed her leave requests with human resources and shared personal information with other employees, including Rena Carlton, an employee relations specialist. Dorey also claimed that the Board’s EEO Director, Sheila Clark, and EEO Counselor, Millie Wiggins, discouraged her from filing a previous EEO complaint alleging discrimination in her performance rating.
Percentage of new non-intern hires over total number of employees
10.5%
14.0%
13.3%
17.5%
The Chairman did more work in diversity and inclusion in 2020. However, more work is expected on addressing failures specific to the Board, namely the issues uncovered in the Artis case and in the Inspector General’s report from 2015. Until these items are complete, these reports will continue to be below expectations.
Federal Reserve Board, Office of Minority and Women Inclusion, Reports to Congress
(Preface language for the report submitted in 2015.) “Pursuant to section 342(e) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the Office of Diversity and Inclusion (ODI) of the Board of Governors of the Federal Reserve System must submit an annual report to the Congress outlining the activities, successes, and challenges of the office. This is the office’s report for calendar year 2014. Sheila Clark serves as the director of ODI.”
With this report, serious concern remains that the Board is not committed to addressing the failures of its past and present. I commend Chairman Powell for a good start; the best outcome is to address, point out, and correct the Board’s systematic discriminatory practices and policies. The experience of the long-running Artis v. Greenspan Bernanke Yellen case casts a profound shadow over the Board for diversity and inclusion issues. It is up to the Board to redeem itself; regrettably, it is still failing.
Before the pandemic, people were living paycheck to paycheck. With the pandemic, many people have lost work. And, people who do have work, many cannot afford the extra expenses.
The federal government must step in to assist its citizens and residents to get through these rough times.
Rich people, unjustly and nearly criminally coddled by the population, need to stay out of the discussion. An example of a loud-mouth millionaire whose foolish statements are unwelcome is Kevin O’Leary (Canadian, member of the Conservative party).
Austerity
Neoliberal economic policy in action
“Free-market” result
Kevin O’Leary, Multimillionaire
Into this terrible situation, Kevin O’Leary, whose net worth $400 million and who is the chairman of O’Shares exchange-traded funds, deigns to tell Americans who is worthy of assistance and who is not. O’Leary in an article with CNBC explained—
That’s why unemployment benefits should be at the center of the next stimulus package, Kevin O’Leary, chairman of O’Shares ETFs and investor on ABC’s “Shark Tank,” tells CNBC Make It.
“I would like to see a $400 a week support for the next 14 months [for] anybody that’s unemployed,” O’Leary says. “If you’re unemployed because of the pandemic, we’ll support you with a few hundred dollars a week until you can find a job,” he adds.
As for an additional round of stimulus checks, O’Leary says it is not necessary. “We don’t need the $1,200 check to everybody anymore because a lot of those people have now found work again,” he says.
Taylor Locke, CNBC
Who are you, O’Leary, to say this?!? Just because you hoard millions of dollars, that makes you a king?
Pandemic Relief for All: the Suffering Unemployed and those whose Salaries Cannot Bear the Additional Expenses of a Public Health Crisis
There are many people suffering with the financial fallout caused by the pandemic: the unemployed who have lost their cash flow completely and then those who have their jobs, but the pre-pandemic salaries cannot keep up with the expenses.
So, I strenuously disagree with multimillionaire O’Leary. The people who have lost their cash flow through no fault of their own need the full $600 on top of unemployment. In addition, people need assistance to deal with the unexpected pandemic expenses—the $1,200 stimulus check, which should not be sporadic but monthly during the pandemic and to relieve the financial burden afterward. (One could argue that it should be more than $1,200.)
Conclusion
I am disgusted that I am seeing the situation that millionaires have the nerve to say who deserves assistance. We all live in the country and the proper place for policy and the policy must serve all of the population, not just the rich, powerful, and well-connected. Enough! Readers, please call or write your respective Representatives and Senators, even write the Congressional committees, to let your opinion be registered: Pandemic relief for all.
We have to stop tolerating anti-black, discriminatory treatment in the United States. The oft-offered excuse of poor “training” and so-called indefinite leave (??) is unacceptable. If you cannot treat all people fairly and equitably, you should not be allowed to have a business open to the public. Atlas Restaurant Group should have all its alcoholic beverage licenses scrutinized and taken back until they demonstrate fairness and equity.
If Atlas Restaurant Group is so peculiar, the Group should establish a private, members-only club. I do not accept the empty, heartless words of the Atlas Restaurant Group.
Author’s Note: In a Baltimore Sunarticle reporting that the Four Seasons Hotel in Harbor East asked Atlas Restaurant Group to remove the dress code in the Atlas-run restaurants in the same building as the hotel. Alex Smith, co-owner mentioned that he turned away international chef, restaurant owner, and TV celebrity Gordon Ramsay from its restaurant for wearing tennis shoes. Given that Mr. Ramsay is an opinionated man, I wonder what he would say about this horrendous anti-black discrimination.
I consider the story irrelevant because Marcia Grant’s video clearly showed a white family being served with a little boy also wearing athletic clothing.
It is long past time playing games with words and start settlement negotiations with the aggrieved family.
Note 2: Marcia Grant hired legal counsel and has filed a lawsuit. Ms. Grant, her son, and the attorney provided comments about what happened at Ouzo Bay on TMZ.
The attorney for Atlas Restaurant Group issued a combative, vengeful statement, stating that Ms. Grant’s video did not show the whole story–that restaurant staff spent 10 minutes telling her about the dress code. Also, the statement explained that the other white child was wearing shorts from J. Crew, with a link. (Notably, the staff with Ms. Grant at the time at the door did not make that distinction.)
The restaurant’s attorney appears to have been closely monitoring Ms. Grant. The statement asserts that Ms. Grant opened a GoFundMe in her son’s name and then took it down and that she had opened social media accounts in her son’s name.
Nevertheless, these are all minuscule matters, as Ms. Grant or her son did not seek out this treatment. As stated in the main post, a dress code at the waterfront is not practical given that a majority of people are tourists in the area.
In addition, the statement failed to note the extreme wealth and privilege of his clients, Alex and Eric Smith, grandsons to a late billionaire. The Smiths’ family holds substantial property interests in Inner Harbor East where the Atlas Restaurants are located.
Still, the managers involved were fired and the statement admits that Ms. Grant and her son should have been served.
I do not accept the Atlas attorney’s statement. Dissecting clothing demonstrates the looseness of the policy. Such loose policies can lead to people suffering from unjust exclusion. One can only imagine the story that would have been offered without Ms. Grant’s video.
Atlas should get serious about reaching a settlement that appropriately compensates Ms. Grant and her son for what they have unjustly suffered.
Anti-Black Discrimination at Ouzo Bay Restaurant, Baltimore–Basis: Dress Code Violation
The Atlas Restaurant Group owns the Ouzo Bay Restaurant in the Inner Harbor area of Baltimore City, Maryland. I used to work in this area. It is a tourist destination; people are typically in vacation mode. There are office buildings and apartments located there, too.
White Family, with Athletic Clothing-Wearing Family Member (a Little Boy), Is Seated
Regarding the Ouzo Bay restaurant, a black mother and son entered the restaurant seeking to be seated. The restaurant employee told them that they could not be seated because the little boy had athletic shorts on. In the background, of course, is a white boy in athletic clothing, with his family already being served.
The black family was refused service; this time, however, the horrible treatment was caught on video.
Atlas Restaurant Group and Its Shabby Excuses
The Atlas Restaurant Group dutifully issued a social media release expressing shock and surprise at the shabby, discriminatory treatment. Of course, this treatment that all may view did not reflect the beliefs of the restaurant group, they say.
While dress codes across Atlas properties are the result of ongoing input from customers, in no way are they intended to be discriminatory.
I say actions and video demonstrate intent, attitude, and beliefs. The entire statement is dumpster-fire-level trash.
In this case, the manager clearly did not want the black mother and son in the restaurant. He just used the “dress code” as a cover. This is not the first incident of this type. The restaurant group has had issues with its dress codes before.
Despite complaints and previous press coverage, the restaurant group continues to be in business on Baltimore City owned properties.
(The owners of Atlas Restaurant Group are well-established (and wealthy) in Baltimore–perhaps this is the reason for the hands-off treatment.) You would think that the City would have taken action on this. Given the wealth and power of the owners, I am not surprised yet still disappointed with the years of inaction.
Note: On June 26, 2020 Maryland State Senator Jill P. Carter wrote an opinion piece (paywall) in the Baltimore Sun. Sen Carter recalled her experience of being turned away from Atlas Restaurant Group properties because of the dress code.
The Weakness of U.S. Civil Rights Law: The Burden is on the Afflicted to Continuously Fight for Humanity
Father Thomas Merton in his book “Seeds of Destruction (1964),” warned of the weakness of the U.S. civil rights act of 1964—the law did not extend any rights to black people. The law only stated that an aggrieved person that was denied something by a white person had the right to sue. So, a person must be belabored to endure discriminatory treatment and then take additional effort to go to a court to seek redress.
If everytime I want an ice cream soda I have to sue the owner of the drugstore, I think I will probably keep going to the same places in my ghetto. That is what the Negro, until recently, has done. Such laws are without meaning unless they reflect a willingness on the part of white society to implement them.” […] If we have got to the point where the laws are frequently, if not commonly, framed in such a way that they can be easily evaded by a privileged group, then the very structure of our society comes into question.
Father Thomas Merton, page 20, excerpted. Read in full “Letters to a White Liberal”; the insight is excellent.
Black People’s Suffering: We Have to Endure Persistent Discrimination at All Times–Unacceptable
Having been humiliated and turned away from the restaurant, the psychological damage to the mother and son had already been done and remains unaddressed. I feel badly for the little boy, having had to deal with open rejection based on his race during his leisure time.
Black people do not have the opportunity to relax in this society because as soon as you let your guard down, you are exposed more to discrimination and hatred. This is true even during a pandemic and overdue reckoning of racism following the killing of George Floyd.
Conclusion
The solution is clear: do as this mother did video record the behavior and statements at the time they are made.
We must get rid of tipping. The restaurant chain is solely responsible for the payment of salary to its employees; a restaurant patron should have no involvement.
Enthusiastically support restaurants and other businesses that welcome and value the humanity of everyone.
If you are going to have a dress code, you must ensure that it is equitably applied–at all times. The Atlas Restaurant Group’s dress code is far too subjective for this; the video clearly showed inequitable treatment, exposing the black family to humiliation. Any training will be useless at this terrible point.
I have no trust for the Atlas Restaurant Group. I give up on you and your terrible restaurants.
Not one penny will be spent in any of your restaurants. I hope they all close down.
Whenever I read the Report to the Congress on the Office of Minority and Women Inclusion (OMWI), I remember the Artis v. Greenspan case. On January 11, 2011, the D.C. Circuit issued an opinion that was against the Federal Reserve stating that the plaintiffs had presented sufficient information for the Fed’s EEO Office to start an investigation (after nearly 20 years).
Also on January 11, 2011, the Fed announced that it was creating an Office of Minority and Women Inclusion. The EEO Director, Sheila Clark, who was named in the Artis opinion, was named to lead the OMWI office.
Clark Testified before House Financial Services Subcommittee; My Extreme Disappointment
Author’s Note(Nov. 1, 2020): I discovered that Sheila Clark testified at a House Financial Services diversity and inclusion subcommittee hearing titled “Holding Financial Regulators Accountable for Diversity and Inclusion: Perspectives from the Offices of Minority and Women Inclusion.”
Among other statements, Clark mentioned that she sits in performance evaluation meetings to ensure fairness and equity.
I laughed out loud with this statement (and with this hearing). I take it she means that she is literally in the room with her mouth shut while the careers of targeted employees are destroyed.
This hearing was truly disappointing. Given the suffering at the Fed with the Artis case, it is an insult that it was not even mentioned.
Clark does nothing to contradict management. (See Clark’s letter in Dr. Auerbach’s book later in this article.) What about Dr. Sahm’s blog? Shamefully, it was not addressed!
Given that issues in this article as well as Artis were not discussed, the House subcommittee hearing was, sadly, useless.
I become irritated reading these OMWI reports because the Board never acknowledges its Jim Crow reality: the agency hates to have black people as employees (see Artis). It shows in the low performance management program, or PMP, ratings for black employees. The Artis case took 18 years to resolve, largely because of Fed intransigence. In addition, Professor Robert Auerbach wrote a book about the Fed, “Deception and Abuse at the Fed,” in which chapter 8 detailed the Fed’s anti-black stances.
For Sheila Clark and, ultimately, the Board Chairman to submit these reports without a full accounting of Fed’s discriminatory past and present is beyond disgrace.
Board Hiring and Promotions, 2016-2019
2016
2017
2018
2019
Positions filled
576
399
505
499
Interns
127
111
116
128
Positions filled w/o counting interns
449
288
389
371
Total number of Board employees
2766
2745
2773
2786
Percentage of new non-intern hires over total number of employees
16.2%
10.5%
14.0%
13.3%
Nevertheless, I read every OMWI report because I want the Fed to know that these reports, this year submitted in stealth as the country deals with the COVID-19 crisis, will not pass by me without comment. I will scour the Fed’s website to find each report. I will dissect the report to see the changes made each year.
A recent blog post by Dr. Claudia Sahm on the absence of black economists at the Federal Reserve and within the Economics profession shows that the Fed’s OMWI department is not doing enough to improve the situation.
On Dr. Claudia Sahm’s Critique of Her Experience at the Federal Reserve Board
I recently became aware of another blog post of Dr. Claudia Sahm, a former economist at the Federal Reserve Board. I read her story with horror and recognition. I believe Dr. Sahm; I just did not realize how roughly female Ph.D. economists (and some the research assistants) were treated. (Other non-Ph.D. staff also do not have a proper workplace.)
Board Offices for Employee Relations and EEO Are Hot Messes; Dr. Sahm Is Blessed for Not Having to Deal with Them
The only thing that I could advise Dr. Sahm is that she should be glad she did not get involved with Employee Relations (ER) (according to the Artis case, ER specialists report complaints to the problematic people and indeed turn to blame the victim like what Dr. Sahm mentioned in her blog post.
People should keep in mind that ER is part of the Management Division. As such, ER cares nothing about employees; complaints are viewed as threats to management! ER and Sheila Clark would never challenge management, especially “officers”. The 18-year plus Artis case also showed that the Board’s EEO office is useless. Sheila Clark is the long-time leader of the Board’s EEO office and (as noted above) named in the Artis case.
Sheila Clark being in charge of the Office of Minority and Women Inclusion and the EEO Office is a sign that the Board is not serious. Ms. Clark’s claim of effectiveness—that she has the ear of the Chair of the Board—is destroyed by the blog post of Dr. Sahm.
Incredibly, Dr. Sahm also had the ear of former Chairman Ben Bernanke and former Chair Janet Yellen. While they provided a conscientious ear, both Benanke and Yellen (while nice people) ultimately were shamefully powerless millionaires and were satisfied to do nothing.
Chairman Jerome Powell’s Statement about Dr. Sahm’s Blog Post is Weak Tea
Similar to Bernanke and Yellen, multimillionaire Board Chairman Jerome Powell shows that he too is “powerless”–a wealthy lawyer unwilling to implement corrective action! His statement at a Fed press conference is exceptionally weak tea. In the OMWI report, it is said that he and Sheila Clark meet regularly. Clearly, the meetings are not effective!
Moreover, for the Board to be proclaiming platitudes of a fair and welcoming workplace is offensive, given that Chairman Powell did practically nothing in 2020 in terms of diversity and inclusion. (See the rest of the blog post for more on this.) With the Artis case and Dr. Sahm’s experience, the Board’s response is not worthy of respect.
There’s been a lot of pain and injustice and unfair treatment that women have experienced in the workplace – not just among economists, but among economists and at the Fed – that’s been going on for far too long,” Powell said. “Like every other organization the Fed could have done more and should have done more.
The Inspector General is no better; the office is a toothless tiger.
The Board Chairman sets the budget for the Inspector General’s office.
The Board Chairman also selects the Inspector General.
Let this sink in: Aggrieved people have no refuge at the Federal Reserve Board.
Conclusion
The Board uses a ruthless “rank and yank” policy, called the Performance Management Program, or PMP. As Dr. Sahm noted in her essay, her so-called ally signed a bad evaluation, which is the start of the slippery slope of termination.
The Board is a whited sepulcher (Matthew 23:27). I am grateful for Dr. Sahm’s blog post; it is long past time for a complete reckoning of discrimination and other inexcusable management misbehavior.
Regardless of whoever is the director of OMWI, the one person that is accountable for the diversity and inclusion policies of the Fed is the Board Chairman, who is, at the time of this post, Jerome Powell. Chairman Powell appears to be extremely lax in this area. He has a Presidential commission; Sheila Clark does not. As a result, Chairman Powell must take the lead and provide directives to make the Fed improve. If a multimillionaire like Chairman Powell cannot get the job done, the situation is hopeless.
After the Killing of George Floyd: The Federal Reserve Still Refuses to Reckon with Its Racist Past and Present
After the writing of this post, the world witnessed the cruel killing of George Floyd, while handcuffed, in Minneapolis, Minnesota. Mr. Floyd died under the knee of former Minneapolis police officer Derek Chauvin and with the indifference of three other former police officers: Thomas Lane, J. Alexander Kueng, and Tou Thao. The United States collapsed as all its brutal inhumanity to nonwhite people came to the light.
Of course, these inhumane behaviors and policies existed, visible to the people subject to the cruel policies daily.
For the Federal Reserve, I have written in this very post and in several previous posts about the unjust policies of the Federal Reserve toward black employees. While the Artis v. Greenspan case is over, the Federal Reserve still has not reckoned with any of its own racist practices and policies.
Yet, after the events following the death of George Floyd, Chairman Powell had the gall to recognize the reckoning for racial injustice in the United States. The Chairman did not have the courage to include the Federal Reserve in his remarks. Not a word about the Artis case. This is not surprising but still extremely disappointing.
It is not lost on me that we are meeting on Juneteenth amid a renewed reckoning of racial injustice. The pandemic has again exposed a range of troubling inequalities, most of them of long standing. As the national discussion continues, it is critical to remember that equity includes access to education, work, and economic opportunity. I am reminded that Dr. King delivered his “I Have a Dream” speech, just a few short blocks from the Federal Reserve, at a rally whose full title was the March on Washington for Jobs and Freedom.
Chairman Jerome Powell, “Building a Resilient Workforce,” at a video conference sponsored by the Federal Reserve Bank of Cleveland, Youngstown, Ohio (via webcast)
The Diversity and Inclusion Activities of the Fed: Shamefully Little
The 2020 OMWI report had some changes from the 2019 OMWI report. There was a strong statement that implied that the Board has taken decisive action in diversity and inclusion (page 4 of the report). However, in reading the description of what was done, I was not impressed.
The ODI program director (Sheila Clark) provides the Fed Chairman and the governors with quarterly updates.
Clark noted that she has direct access to the Chairman Powell in case she has any issue to raise. (When this statement is compared with the issues raised in the introduction of this blog post, it shows that the Board is simply not serious about diversity and inclusion—a real travesty.) Sheila Clark has been involved in the abuses; the reader cannot believe that she cares now about diversity and inclusion issues with her past.
Sheila Clark’s letter to the EEOC (printed in the Auerbach book, page 123).
These paltry activities are simply insufficient and unacceptable. The Board Chairman has effectively done nothing. If the Chairman can deal with a dispute over a dog park in Chevy Chase, Maryland, he has the ability to handle many issues at once. I cannot accept any excuse that claims he is too busy.
Federal Reserve Board, Office of Minority and Women Inclusion, Reports to Congress
(Preface language for report submitted in 2015.) “Pursuant to section 342(e) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the Office of Diversity and Inclusion (ODI) of the Board of Governors of the Federal Reserve System must submit an annual report to the Congress outlining the activities, successes, and challenges of the office. This is the office’s report for calendar year 2014. Sheila Clark serves as the director of ODI.”
With this report, serious concern remains that the Board is not committed to addressing the failures of its past and present. The activities for diversity and inclusion detailed in the report are weak without strong leadership at the top. The experience of the long-running Artis v. Greenspan Bernanke Yellen case casts a profound shadow over the Board for diversity and inclusion issues. It is up to the Board to redeem itself; however, it is failing.
Federal Reserve Board: H.2 Release; H.4.1 Release (Balance Sheet)
The Federal Reserve Board (Board) publishes a weekly digest of its activities on its website. The digest is called the H.2 Release and is published every Thursday.
H.2 Release–Action of the Board, Its Staff, and the Federal Reserve Banks; Applications and Reports Received
February 15, 2020
Category
Action Taken
Testimony and Statements
Monetary Policy — statement by Chair Powell before the House Committee on Financial Services on February 11 and the Senate Committee on Banking, Housing, and Urban Affairs on February 12. -Published, February 11, 2020
Enforcement
Deutsche Bank AG, Frankfurt am Main, Germany — cease-and-desist order dated April 20, 2017, terminated February 11, 2020. -Announced, February 13, 2020 Discover Financial Services, Riverwoods, Illinois — written agreement dated May 26, 2015, terminated February 5, 2020. -Announced, February 13, 2020 JPMorgan Chase & Co., New York, New York — cease-and-desist order dated November 17, 2016, terminated February 11, 2020. -Announced, February 13, 2020 The Royal Bank of Scotland PLC, Edinburgh, Scotland, and RBS Securities Inc. (n.k.a NatWest Markets Securities Inc.), Stamford, Connecticut — cease-and-desist order dated May 20, 2015, terminated February 12, 2020. -Announced, February 13, 2020
February 22, 2020
Category
Action Taken
Bank Branches, Domestic
Frost Bank, San Antonio, Texas — commenter’s request for review of the delegated approval of the application by Frost Bank to establish a branch at 4321 West Sam Houston Parkway North, Houston. -Denied, February 18, 2020
Forms
Forms — initial Board review (1) to extend with revision the Survey of Small Business and Farm Lending (FR 2028) and Joint Standards for Assessing the Diversity Policies and Practices of Entities Regulated by the Agencies (FR 2100); and (2) to extend without revision the Reporting Requirements Associated with Regulation A (FR A). -Approved, February 21, 2020
February 29, 2020
Category
Action Taken
Banks, State Member
Public Welfare Investments — (1) determination that certain investments in areas in which the poverty rate is 20 percent or more are designed primarily to promote the public welfare; and (2) for Banco Popular de Puerto Rico, San Juan, Puerto Rico, to make a public welfare investment. -Approved, February 21, 2020 (A/C)
Regulations and Policies
Stress Capital Buffer — final rule to simplify the Board’s capital framework by establishing a stress capital buffer requirement. -Approved, February 28, 2020
March 7, 2020
Category
Action Taken
Personnel
Division of Research and Statistics — appointment of Nicole Bennett as senior associate director. -Approved, March 6, 2020
Regulations and Policies
Resolution Plan Guidance for Large Foreign Banks — proposed interagency changes to guidance on the resolution plans of certain large, complex foreign banking organizations, focusing on the agencies’ expectations for derivatives and trading activities and payment, clearing, and settlement activities. -Approved, March 6, 2020
Enforcement
City National Bancshares Corporation, Newark, New Jersey — written agreement dated December 14, 2010, terminated February 25, 2020. -Announced, March 5, 2020 Community Financial Holding Company, Inc., Duluth, Georgia — written agreement dated January 7, 2010, terminated March 4, 2020. -Announced, March 5, 2020 Interlocutory Appeal Request — determination denying requests by Frank Smith and Mark Kiolbasa for immediate review of two orders issued by the administrative law judge in concern with an enforcement matter. -Approved, March 6, 2020
March 14, 2020
Category
Action Taken
Forms
Forms — initial Board review to extend without revision of the Compensation and Salary Surveys (FR 29). -Approved, March 9, 2020 Forms — (1) initial Board review to extend with revision the Capital Assessments and Stress Testing Reports (FR Y-14A/Q/M), and (2) final Board review to implement temporary revisions to the FR Y-14A report and instructions. -Approved, March 13, 2020
Personnel
Division of Monetary Affairs — appointment of Brian Bonis and Elizabeth Marx as assistant directors. -Approved, March 9, 2020
Regulations and Policies
Internal Appeals and Ombudsman Policies — policy statements governing (1) appeals of material supervisory determinations and (2) the functions of the ombudsman for the Federal Reserve System. -Approved, March 2, 2020 (A/C) Supervisory Practices — interagency statement on supervisory practices for financial institutions affected by tornadoes in Tennessee. -Announced, March 12, 2020
March 21, 2020
Category
Action Taken
Monetary and Financial Policy
Author’s note: COVID-19-related items Commercial Paper Funding Facility (CPFF) — establishment of the CPFF to support the flow of credit to households and businesses. -Approved, March 17, 2020 Discount Window — interagency statement encouraging banks to use the Federal Reserve’s discount window to support the smooth flow of credit to households and businesses. -Announced, March 16, 2020 Liquidity and Market Functioning — expansion of program to support the flow of credit to the economy and enhance the liquidity and functioning of state and municipal money markets. -Approved, March 20, 2020 Money Market Mutual Fund Liquid Facility (MMLF) — establishment of the MMLF to broaden support for the flow of credit to households and businesses. -Approved, March 18, 2020 Primary Dealer Credit Facility (PDCF) — establishment of the PDCF to support the credit needs of households and businesses. -Approved, March 17, 2020
Personnel
Legal Division — appointment of Charles Gray as senior associate general counsel and chief of staff. -Approved, March 19, 2020
Regulations and Policies
Money Market Mutual Fund Liquidity Facility (MMLF) — interagency interim final rule with request for comment to allow banking organizations to neutralize the regulatory capital effects of participating in the MMLF. -Approved, March 19, 2020 Regulation YY (Enhanced Prudential Standards) — interim final rule with request for comment to revise the definition of “eligible retained income” for purposes of the Board’s total loss-absorbing capacity (TLAC) rule. -Approved, March 21, 2020 Regulatory Capital Rule — interagency interim final rule with request for comment to revise the definition of “eligible retained income” for banking organizations subject to the agencies’ capital rule. -Approved, March 17, 2020 Section 23A and Regulation W — policy to provide exemptions from section 23A of the Federal Reserve Act and the Board’s Regulation W to permit member banks to purchase certain assets from their affiliated money market mutual funds. -Approved, March 17, 2020 Section 23A and Regulation W — policy to provide exemptions from section 23A of the Federal Reserve Act and the Board’s Regulation W to permit member banks to purchase certain assets from their affiliated broker-dealers. -Approved, March 18, 2020
March 28, 2020
Category
Action Taken
Board Operations
System of Records — publication for comment of a notice of a proposed new system of records, BGFRS-43 (Security Sharing Platform). -Approved, March 9, 2020 (A/C)
Forms
Forms — final Board review to extend with revision the Financial Statements for Holding Companies (FR Y-9C, FR Y-9LP, FR Y-9SP, FR Y-9ES, and FR Y-9CS). -Approved, March 27, 2020
Monetary and Financial Policy
Credit Facilities — (1) establishment of the Term Asset-Backed Securities Loan Facility (TALF), Primary Market Corporate Credit Facility (PMCCF), and Secondary Market Corporate Credit Facility (SMCCF); (2) expansion of assets covered by the Commercial Paper Funding Facility (CPFF) and Money Market Mutual Fund Liquidity Facility (MMLF); and (3) announcement of plans for a Main Street Business Lending Program. -Approved, March 22, 2020
Personnel
Division of Financial Stability — appointment of Kent Hiteshew as deputy associate director. -Approved, March 24, 2020
Regulations and Policies
Current Expected Credit Loss (CECL) Methodology — (1) interagency interim final rule with request for comment to provide banking organizations that adopt the CECL methodology during 2020 with the option to delay CECL’s impact on regulatory capital; (2) temporary revisions to the Consolidated Financial Statements for Holding Companies (FR Y-9C) and Capital Assessments and Stress Testing Reports (FR Y-14A/Q/M) to reflect the interim final rule; and (3) initial Board review to extend with such revisions the FR Y-9C and FR Y-14A/Q/M reports. -Approved, March 27, 2020 Policy Payment System Risk (PSR Policy) — notice of delay until October 1, 2020, of the implementation date of changes to the PSR Policy related to procedures governing the provision of intraday credit to U.S. branches and agencies of foreign banking organizations. -Approved, March 23, 2020 Standardized Approach for Calculating Counterparty Credit Risk (SA-CCR) — (1) interagency notice to allow banking organizations to early-adopt the SA-CCR methodology for the first quarter of 2020 and (2) temporary revisions to the Consolidated Financial Statements for Holding Companies (FR Y-9C) to allow banking organizations to reflect early adoption of the SA-CCR methodology. -Approved, March 26, 2020 Supplementary Leverage Ratio — interim final rule with request for comment to revise the Board’s capital rule so that the denominator of the supplementary leverage ratio temporarily excludes U.S. Treasury securities and deposits at the Federal Reserve Banks. -Approved, March 25, 2020
Supervision and Regulation
Loan Modifications — interagency statement with the Conference of State Bank Supervisors on loan modifications and reporting for financial institutions working with customers affected by COVID-19. -Announced, March 22, 2020 Regulatory Reporting Relief — announcement that the Federal Reserve will offer financial institutions with $5 billion or less in total assets additional time to submit certain regulatory reports in light of staffing priorities and disruptions caused by COVID-19. -Published, March 26, 2020 Small-Dollar Loans — interagency statement encouraging banks, savings associations, and credit unions to offer responsible small-dollar loans to consumers and small businesses in response to COVID-19. -Announced, March 26, 2020 Supervisory Activities — statement to provide additional information to financial institutions regarding adjustments to the Federal Reserve’s supervisory approach in light of COVID-19. -Announced, March 24, 2020
April 4, 2020
Category
Action Taken
Regulations and Policies
Community Bank Leverage Ratio — (1) two interagency interim final rules with request for comment to provide temporary relief to community banking organizations; and (2) related temporary revisions to the Financial Statements for Holding Companies (FR Y-9C reports). -Approved, April 3, 2020 Control and Divestiture Proceedings — final rule to delay until September 30, 2020, the effective date of the Board’s revised framework for determining control of a banking organization. -Approved, March 31, 2020 Lending and Liquidity Facilities — reports to Congress pursuant to section 13(3) of the Federal Reserve Act in response to COVID-19. -Approved, March 24, 2020 (A/C) Lending and Liquidity Facilities — reports to Congress pursuant to section 13(3) of the Federal Reserve Act in response to COVID-19. -Approved, March 29, 2020 Privacy Act — proposed rule and request for comment to amend the Board’s Privacy Act Rule by adding a system of records, entitled BGFRS-43 (Security Sharing Platform), to the Rule’s list of system of records that are exempt from certain provisions of the Privacy Act. -Published, April 1, 2020 Volcker Rule — interagency announcement that the financial regulatory agencies will consider comments submitted before May 1, 2020, on their proposal to modify the Volcker rule’s general prohibition on banking entities investing in or sponsoring “covered funds.” -Announced, April 2, 2020
Section 23A Exemptions
PNC Bank, National Association (Bank), Wilmington, Delaware — determination that a proposed transaction by Bank to purchase certain assets from a securities affiliate would be in the public interest and consistent with the purposes of section 23A of the Federal Reserve Act. -Approved, March 25, 2020 (A/C)
Supervision and Regulation
Mortgage Servicing — interagency policy statement with the Conference of State Bank Supervisors regarding the mortgage servicing rules in response to the COVID-19 emergency and the CARES Act. -Announced, April 3, 2020
April 11, 2020
Category
Action Taken
Forms
Forms — initial Board review to extend without revision the Ongoing Intermittent Survey of Households (FR 3016) and final Board review to extend with revision the Census of Finance Companies and Survey of Finance Companies (FR 3033p and FR 3033s). -Approved, April 8, 2020
Monetary and Financial Policy
Lending Facilities — establishment of the Paycheck Protection Program Lending Facility (PPPLF) and modifications to the Primary Market Corporate Credit Facility (PMCCF), Secondary Market Corporate Credit Facility (SMCCF), and Term Asset-Backed Securities Loan Facility (TALF). -Approved, April 8, 2020 Lending Facilities — establishment of the Municipal Liquidity Facility, Main Street New Loan Facility, and Main Street Expanded Loan Facility. -Approved, April 8, 2020
Personnel
Division of Research and Statistics — appointment of John Stevens as senior associate director and Tim Mullen as associate director. -Announced, April 9, 2020
Regulations and Policies
Regulatory Capital — (1) interagency interim final rule with request for comment to allow banking organizations to neutralize the regulatory capital effects of participating in the Paycheck Protection Program Lending Facility; and (2) related temporary revisions to the Financial Statements for Holding Companies (FR Y-9 reports). -Approved, April 8, 2020 Temporary Appraisal Relief — interagency interim final rule with request for comment to temporarily defer real estate-related appraisals and evaluations under the agencies’ appraisal regulations. -Approved, April 10, 2020
Supervision and Regulations
Loan Modifications — revised interagency statement, in consultation with state financial regulators, on loan modifications and reporting for financial institutions working with customers affected by the coronavirus. -Announced, April 7, 2020
Enforcement
Wells Fargo & Company (WFC), San Francisco, California — amendment to the 2018 Consent Order to temporarily and narrowly modify the growth restriction on WFC so that it can provide additional support to small businesses. -Approved, April 8, 2020
Federal Reserve Board: Balance Sheet (H.4.1 Release)
The Board publishes data of factors affecting reserve balances. The digest is called the H.4.1 Release, and they are published every Thursday (or the next business day if the publication date falls on a federal holiday).
[Note: The blog will cover the line titled “Total Factors Supplying Reserve Funds.”] In early March 2020, a global pandemic occurred–COVID-19 Coronavirus.
Total factors supplying reserve funds
(as of February 19, 2020): $4,219,781 (in millions of dollars)
(as of February 26, 2020): $4,206,417 (in millions of dollars).
(as of March 4, 2020): $4,289,287 (in millions of dollars)
(as of March 11, 2020): $4,360,026 (in millions of dollars)
(as of March 18, 2020): $4,716,488 (in millions of dollars)
(as of April 1, 2020): $5,859,580 (in millions of dollars)
(as of April 8, 2020): $6,131,363 (in millions of dollars)
(as of April 15, 2020): $6,416,085 (in millions of dollars)
(On September 26, 2007, this amount was $900,473 (in millions of dollars)).
Federal Reserve Board: H.2 Release for Week Ending February 8, 2020; H.4.1 Release (Balance Sheet) for February 13, 2020
The Federal Reserve Board (Board) publishes a weekly digest of its activities on its website. The digest is called the H.2 Release and is published every Thursday. The release for the week ending February 8, 2020, is below.
H.2 Release–Action of the Board, Its Staff, and the Federal Reserve Banks; Applications and Reports Received
Category
Action Taken
Monetary and Financial Policy
Monetary Policy Report — semiannual report to the Congress. -Published, February 7, 2020
Personnel
Division of International Finance — appointment of Robert J. Vigfusson as assistant director. -Announced, February 7, 2020 Division of Research and Statistics — appointment of Glenn Follette as associate director; Eric Engstrom as deputy associate director; Paul Lengermann, Byron Lutz, Raven Molloy, Gustavo Suarez, and Clara Vega as assistant directors; Steve Sharpe as senior adviser; and Charles Fleischman as adviser. -Announced, February 7, 2020
Enforcement
Farmers and Merchants Bank of Craig County, New Castle, Virginia — consent order of assessment of a civil money penalty pursuant to the National Flood Insurance Act. -Announced, February 6, 2020
Federal Reserve Board: Balance Sheet (H.4.1 Release)
The Board publishes data of factors affecting reserve balances. The digest is called the H.4.1 Release, and they are published every Thursday (or the next business day if the publication date falls on a federal holiday). The release for February 13, 2020, is below. 13
[Note: The blog will cover the line titled “Total Factors Supplying Reserve Funds.”]
H.4.1 Release–Factors Affecting Reserve Balances
Total factors supplying reserve funds (as of February 12, 2019): $4,230,943 (in millions of dollars). (On September 26, 2007, this amount was $900,473 (in millions of dollars)).
The Federal Reserve Board (Board) publishes a weekly digest of its activities on its website. The digest is called the H.2 Release and is published every Thursday. The release for the week ending February 1, 2020, is below.
H.2 Release–Action of the Board, Its Staff, and the Federal Reserve Banks; Applications and Reports Received
Category
Action Taken
Forms
Forms — initial board review to extend without revision the Notification of Nonfinancial Data Processing Activities (FR 4021); final Board review to extend with revision the Intermittent Survey of Businesses (FR 1374); and final Board review to extend without revision the Filings Related to the Gramm-Leach-Bliley Act (FR 4010, FR 4011, FR 4012, FR 4017, FR 4019, and FR 4023). -Approved, January 29, 2020
Personnel
Division of Financial Management — appointment of Thomas Murphy as deputy associate director. -Approved, January 17, 2020 (A/C)
Regulations and Policies
Volcker Rule, and Determination of Control Over Banking Organizations — (1) publication for comment of a notice of proposed rulemaking to clarify and streamline the Volcker Rule’s “covered funds” restrictions, and (2) final rule to simplify and increase the transparency of rules for determining control of a banking organization. -Approved, January 30, 2020
Enforcement
Alden State Bank, Alden, New York — consent order of assessment of a civil money penalty pursuant to the National Flood Insurance Act. -Announced, January 30, 2020 Farmers & Merchants Bank, Baldwyn, Mississippi — issuance of a final decision and an order of prohibition requiring restitution, and assessment of a civil money penalty against Carol Allen, a former institution-affiliated party. -Approved, January 29, 2020 The Goldman Sachs Group, Inc., New York, New York — issuance of a consent order of prohibition against Andrea Vella, an institution-affiliated party of certain nonbank subsidiaries of The Goldman Sachs Group, Inc. -Approved, January 31, 2020
Federal Reserve Board: Balance Sheet (H.4.1 Release)
The Board publishes data of factors affecting reserve balances. The digest is called the H.4.1 Release, and they are published every Thursday (or the next business day if the publication date falls on a federal holiday). The release for February 6, 2020, is below.
[Note: The blog will cover the line titled “Total Factors Supplying Reserve Funds.”]
H.4.1 Release–Factors Affecting Reserve Balances
Total factors supplying reserve funds (as of February 6, 2019): $4,214,936 (in millions of dollars). (On September 26, 2007, this amount was $900,473 (in millions of dollars)).
[Ultimately, the bill was passed and signed into law, but what about those issues that lack powerful champions like Jon Stewart?]
The failure that frustrated Jon Stewart represents a small part of my exasperation with the Federal Reserve Board (Fed) and all its chairmen. The United States government has decided to starve 90 percent of the population while supporting the top 10 percent.
In addition, the system props up the gambling casino known as Wall Street despite the fact that 10 percent of the richest U.S. families own 84 percent of all U.S. stocks.[1] Your Tealbookfocuses nearly all of the text on Wall Street; the wreckage of the Fed is made manifest.
A Note on the COVID-19 Coronavirus Crisis and Epic Congressional Leadership Failure
After this post was initially published, the COVID-19 Coronavirus pandemic occurred. The pandemic is so far causing dreadful illness and death for some; others have mild or no illness.
To prevent what is termed “community spread“, state and local governments have been enforcing quarantines or social distancing to try to reduce the numbers of people who fall seriously ill.
Office workers have been sent home to telework; other businesses where people gather (restaurants, bars, gyms, and so on) have been closed. Some have been required to stay home most of the time, except for essential activity–work at a job where physical presence is needed, medical appointment, and so on) The people who work at the closed businesses are immediately out of work with bills pending to be paid and sometimes with families to feed and to care for.
What is needed now is radical government support for people who are scared of becoming ill and now are extremely concerned about how they will pay their bills.
Senator Bernard Sanders (I-Vermont), a presidential primary candidate, has up to this time in 2020, has not been achieving enough delegates to win the Democratic Party nomination. The Coronavirus crisis burst forth in the midst of primary season.
Senator Sanders presented a comprehensive proposal to help the country and its people move through the public-health and financial catastrophe. (Very sadly, Senator Sanders did not present these proposals on the Senate floor and voted with Congessional leadership on a package that has proven to be a failure for the 90 percent.)
The Trump Administration, had a proposal to give out a $2,000 check to people in the United States. (Senator Sanders proposed sending $2,000 per month until the crisis is over.) Democratic Congressional leadership opposed universal cash payments for various reasons.
Indeed, Speaker of the House Nancy Pelosi (D-Calif.) supported a tax credit plan along the lines presented in the Senate Republican’s initial bill. (Pelosi did not want a universal distribution of checks (that is, according to Jeff Spross in The Week she did not want to be seen handing out checks to millionaires.)
In technical economic jargon, Pelosi wants to “means test” cash aid in response to coronavirus: Don’t give the checks to everyone, but target them to the poorest people, by at least scaling up the checks for people further down the income ladder, or most likely phasing them out completely for Americans above a certain income threshold. Pelosi’s deputy chief of staff, Drew Hammill, fleshed this point out further in a tweet: “The Speaker believes we should look at refundable tax credits, expanded [unemployment insurance] and direct payments — but MUST be targeted.”
Speaker Pelosi and Charles Schumer (D-N.Y.), issued a statement:
Democrats support a plan that puts ‘Workers First’. That means taking bold action to help workers and small businesses first by greatly increasing unemployment insurance and Medicaid, making massive investments to help small businesses survive, expanding paid sick and family leave and putting money directly into the hands of those who need it most.
Joseph Biden, Jr., the presumptive Democratic presidential nominee, proposes a plan that esssentially expands or adjusts existing programs to deal with the crisis, along the lines presented by Pelosi and Schumer.
When you have a widespread public health crisis, requiring businesses to close and people to stay at home, a mere proposal to expand (skimpy in the best of times–not now) unemployment insurance and only place cash in the hands of the destitute is at best myopic.
Senate Republicans, announced a proposal that does not help struggling people (who I spoke about in this post–see subsection titled “The Lived Reality of the 90 Percent: Relative Deprivation & Impoverishment”) get through this crisis.
The Influence of Wealth on Congressional Policy at a Crisis Moment: Net Worth of Congressional Leadership–Nancy Pelosi (Multimillionaire), Mitch McConnell (Multimillionaire), Charles (Chuck) Schumer (almost a millionaire), and Kevin McCarthy ($148,002 (2016))
Can the extreme financial security of Congressional leaders explain these minuscule, underwhelming proposals? Senator Sanders’ plan should be the starting point.
In order to deal with the crisis the government must step up to assuage the fears of the population and support them as we all comply with necessary public-health-related directives. Will the stubbornness of the “status quo” cause the government not to rise to the level of a crisis?
On the Federal Reserve’s “Political Independence”
In an Inspector General’s Congressionally mandated report on diversity and inclusion, the Federal Reserve maintained the position that the U.S. Government could not compel the Fed to follow civil rights statutes, citing 12 U.S.C section 244. I found this astounding. So-called political independence is a gift; the recipient must act in an exemplary way with such a privilege. The Federal Reserve falls well short of deserving such a broad exception.
In a previous blog post, the following was written, which still applies at the present moment.
But it is unreasonable to expect the people of the United States of America to accept an “independence” stance that requires the Board, a federal agency, to be free from federal employment statutes that were adopted into law long after 1913, including civil rights laws and Title 5 of the U.S. Code. Asking any citizen in the present day to respect employment law from 1913 or to allow the Board to choose which statutes it will follow (or comply with) is totally unacceptable.
The money that the Board, on which it conducts monetary policy, comes from the people of the United States of America, which has a government that possesses authority to govern through the consent of its people. Once the government loses that consent, authority is lost. The Board, in its quest to protect a nebulous independence for non-monetary-policy administrative activities, forgets this bedrock principle and risks institutional failure.
The Federal Reserve and an Employment Discrimination Case: Artis v. Greenspan (v. Bernanke and v. Yellen)
In non-monetary policy terms, the wayward, Jim Crow Fed was exposed in the Artis v Greenspan[2] case, a case where the plaintiffs had to sue just to access the Fed’s corrupt and useless EEO process. The plaintiffs suffered for eighteen long years and went through three chairs: Greenspan, Ben Bernanke, and Janet Yellen. I have no respect for any of them.
Multi-millionaire Jerome Powell: $1,000,000 per Year without Work; Median Annual Salary in the United States: $47,060
So focused on the rich that the nonrich are trod upon. The Chairman of the Federal Reserve, Jerome Powell, B.A., J.D., is a multimillionaire. He could decide to stay at home and still have a cool million dollars, or $19,230.76 per week coming in every year.
The median salary in the United States is $47,060, or $905 per week (before taxes).[3] The Fed Chairman, makes the median U.S. worker’s salary in a mere 2.4 weeks! This result only exemplifies the terrible problem.
The Lived Reality of the 90 Percent: Relative Deprivation & Impoverishment
While the Fed Chairman and his ilk live in luxury, privilege, and financial security, most of the people of the United States live in high-class ruin.
In addition, tales of “hard work” are used to immiserate the poor and suffering; rich people who do not do any work are accepted without judgment. According to an article in the Guardian, “The bad behavior of the richest: what I learned from money managers,” by Brooke Harrington:
When the wealthy are revealed to be drug addicts, philanderers, or work-shy, the response is – at most – a frisson of tabloid-level curiosity, followed by a collective shrug.
Behaviors indulged in the rich are not just condemned in the poor, but used as a justification to punish them, denying them access to resources that keep them alive, such as healthcare and food assistance. Discussion of poverty has become almost impossible without moral outrage directed at lazy “welfare queens”, “crackheads” and other drug addicts, and the “promiscuous poor” (a phrase that has cropped up again and again in discussions of public benefits over more than a century).
Politicians (of both parties) cut back vital services on stereotypes because they seek a way to do unacceptable cutbacks through victim-blaming. It is horrendous to treat human beings this way.
In this life, no one knows what the next day will bring. People must read the biblical parable of Lazarus and the rich man (Luke 16:19-31).
While there are tent cities in cities that have become too expensive for most to afford, what is not seen is the great anxiety of those who seem to have food, clothing, and shelter. These are people, who if they miss one paycheck, will end up in a tent city[4] or living in their car. Worse, a person could have a full-time job yet still must live in the homeless shelter.
Note: In 2021, the Fed Chairman noted the presence of a tent city (21st and E Streets, NW) near the Federal Reserve’s office buildings on 20th and C Streets, NW. The Fed cannot help these suffering people as Fed policy consistently benefits the richest.
Others are functionally homeless, living with relatives or friends, while not being able to live independently. The “American Dream” of upward mobility and financial stability is long dead, except for the 9.9 percent[5].
The thing is if you are poor without dependents, the United States cares not one thimble about you. Indeed, policy is to blame those people for their impoverishment. At the same time, the people witness the rise of millionaires and billionaires, of which the Fed Chairman is a part, who simply do not have to work.
These abusers of society then have the gall to lecture the government for austerity policy to further impoverish the poor and seek government guarantees for the maintenance of rich peoples’ wealth.
Jason Furman, Harvard Ph.D, and a Multimillionaire
People were lauding Jason Furman, Harvard Ph.D., for being a neoliberal so-called policy wonk and economist technician, who counseled that the United States was going into fiscal danger with the debt to GDP ratio approaching 105 percent.[6]
Unmentioned was that the austerity paper on which the debt-to-GDP ratio was based was found to have significant error by a then-Ph.D student, Thomas Herndon, Ph.D.[7]
Also unmentioned in the article was that Furman himself and his siblings are millionaires due to their late father’s business.[8] Imagine proposing ways for the mass of the people of the United States to suffer while profiting from the suffering. This is disgusting.
Vice documentary on the tenth anniversary of the 2008 financial crisis
I had the (mis)fortune of watching a Vice documentary on the tenth anniversary of the global financial crisis.[9] I was sickened. Wall Street firms had perpetuated fraud in mortgage securities to produce fees. When the “plan” blew apart, the goal was to reimburse those firms and to blame the people harmed.
The Failure of the Bailout: Focusing on the “System” and the Wealthy Rather than on the People of the United States of America
Timothy Geithner, Benjamin Bernanke, and Henry Paulsen have convinced themselves that they did not rescue and bailout Wall Street, they gave money to Wall Street banks to ensure that people could go to the ATM and get cash.[10]
Well, how honorable! (/sarcasm)
The Federal Reserve and the U.S Treasury place money in the banks with no direction or supervision that that money got to the people. The government should have had a direct hand in correcting the crisis and punishing all responsible. The focus should not have been to prop up the very system that failed.[11]
Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks, and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream by Aaron Glantz
I have discovered that during the Obama Administration and continuing in the Trump Administration that a set of financial vultures were enriched by lax government policy. The government had a set of homes affected by the mortgage crisis. The government officials under Obama stated that the government could not deal with the homes and had to have “private sector” assistance.
Discover more of Aaron Glantz’s book, “Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks, and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream,” at Reveal News.
Who was this so-called private sector, which the government guaranteed them against loss (and received no part of the gain nor did the ill-affected people receive any relief)?
According to Mr. Glantz, this privileged class, coddled by both Democrat and Republican administrations, are Steven Mnuchin (former Treasury Secretary), Steve Schwarzman, the founder of Blackstone, the giant private equity firm, Tom Barrack, one of Donald Trump’s closest friends.
Considering this post, I was not surprised still I am deeply disgusted by the financial savagery permitted by capitalism which is aided by cavalier government officials.
The United States Abandoned Citizens Who Followed the Rules of the Pre-Internet Era
I, for one, ruthlessly lost my job at 42 (after a rank-and-yank campaign to malign me and my work), and all my savings. I searched for work for 63 months, with no assistance from “social safety net” programs and ran out of cash. (The feeling of being cashless in this society embittered me; I lost trust in the system, never to be regained.)
Numerous applications, a handful of interviews, with rampant age discrimination. All throughout, no support from the government of the United States. I did all that was expected from society. I studied and earned degrees. I applied for jobs and did what the managers asked and more. But I came from the paper-based system before the Internet age. And, with my industry, publishing, I adapted to it. But what I could not do alone is adapt my legacy job to the new careers in the Internet age.
Frustratingly, policymakers jumped to the Internet age jobs and abandoned all those people who grew up in the legacy era. I am willing to learn about the Internet era, but I must be given room and support to make the transition and to be protected against age discrimination. It is not my fault that I followed the rules of a previous era that has passed. And, policymakers were foolish to abandon a great swath of the population to focus on the new shiny bauble. We see the ill effects of that decision clearly in the United States and the world.
My Experience after the Financial Crisis and Abandonment: Financial Ruin
As a single person without dependents, I did not qualify for any assistance except for 52 weeks of unemployment insurance. (I was out of the labor force involuntarily for 252 weeks.[12] I was a member of the long-term unemployed (though I will never forget the experience of having to fend for myself for 200 weeks when I was in dire need). The jobs that I built my career on were sent out to other countries. The jobs that remain are for young people willing to work in precarious employment conditions or require exceptional expertise-a Ph.D. in some narrow field in mathematics or computer science, machine learning jobs, for example.
The Hellscape of Seeking Social Assistance (when You Are Poor and Vulnerable)
So, for 200 weeks, there was no assistance except from my now-exhausted retirement savings. Well into long-term unemployment, I heard of Workforce Innovation and Opportunity Act (WIOA)[13] at the unemployment office. I went there excited about the opportunity for a fresh start. What I found in my jurisdiction was a program geared for those who never had a job and one person burdened with implementing the program in the jurisdiction I live in.
So many hoops to go through for, ultimately, a short 26-week course for a minimum wage job. The WIOA representative was shocked I was there since I possessed two degrees—the goal of the people in the unemployment office. None of the WIOA courses would help me make the transition to Internet-era work.
My initial hopes were dashed; I gave up. I could be depressed and anxiety-ridden on my own. As for the other social assistance programs, the ” available ” assistance is invasive of one’s privacy, degrading, and paltry.[14]
This was not the case for Wall Street.
The Annoying, Foolish, and Irresponsible Rick Santelli
After Wall Street was completely bailed out, the foolish, irresponsible, and self-centered Rick Santelli[15] of CNBC on the trading floor of the New York Stock Exchange had the absolute gall to say that people did not want to bail out people who should not have had mortgages—right after bailing out all Wall Street firms who provided those loans and promoted in particular subprime loans.[16]
Former president Obama, surrounded by Wall Streeters, listened to that rant, and did nothing (not even used the bully pulpit!) to aid the people. The devastation to the mass of the people broke the trust in the government, and we see the result today.
The Indifferent Federal Reserve and Its Chairman
And, the Federal Reserve, and Chairman Powell, a multimillionaire, blame the lower labor force participation rate on people that want to stay on disability (hard to get) or SNAP[17] or to play video games[18] is completely irresponsible and ignorant. The Fed Chairman and the Federal Reserve System should be ashamed![19] Yes, I am speaking bluntly; this is not a time for diplomatic language. In addition, watch “The Big Short” and “Inside Job”. [20]
Update: Multimillionare Fed Chairman Jerome Powell revised his remarks in February 2020.
At the February 2020 Monetary Policy Report hearings, Chairman Powell, a multimillionaire, explained that the lower labor force participation rate is not based on the (paltry, extremely limited) social benefit programs but on education (which plunges many people into debt) and the opioid crisis.
Perhaps firing people with specific jobs that were sent to other countries and replacing them with highly specific jobs that the unemployed could not qualify for is also part of the problem.
Well, I am deeply disappointed in the entire Federal Reserve System. The Fed is captured by the rich and powerful. Given the Fed Chairman’s wealth, I have diminishing faith that the Fed will do anything, as the rich and powerful benefit from the broken system. The Fed Listens farce will lead to no effective change. The system is stacked with millionaires and the powerful.
It is a contributor to the political turmoil and lack of trust in U.S. political and capitalistic institutions. Unfortunately, the “American Way” is to wait for collapse and then rush to fix it. The destruction is too extensive for such a cavalier and lax approach.
[1] Household Wealth Trends in the United States, 1962 to 2016: Has Middle Class Wealth Recovered? Edward N. Wolff, NBER Working Paper No. 24085, November 2017.
[12] I had a few precarious jobs. I consider it a part of unemployment because the sword of Damocles was over me in each of those precarious positions. One of them earned me 26 weeks more of unemployment insurance. Each of those weeks I was filled with anxiety.
[20] There will never again be a bailout for Wall Street, other than the government taking over Wall Street functions while allowing the guilty parties to go to zero.
A DC Observer 