Federal Reserve Board: Paper by Jordan Haedtler, Andrew Levin, and Valerie Wilson Propose Reform to Fed Structure; Diversity Important to Foster Well-Considered Monetary Policy

Haedtler, Jordan; Levin, Andrew; and Wilson, Valerie (2016), “Making the Federal Reserve Fully Public: Why and How,” paper, August.

This paper outlined current issues presented by the current operations of the Federal Reserve Board and the Federal Reserve Banks (collectively, the Fed). The authors present several ideas for thinking about reforms (that would not affect the Fed’s political independence (a long-used diversionary tactic against any reform, see Auerbach, Robert D. (2008), Deception and Abuse at the Fed: Henry B. Gonzalez Battles Alan Greenspan’s Bank, Austin: University of Texas Press.”).

The graphic (below) shows the potential obstinacy the authors are up against with the Fed; persistence is key and absolutely necessary in this case. The Fed is a public agency; it is way past time for the organization to accept it.

Sheila Clark’s letter to the EEOC (printed in the Aurebach book, page 123).


I will review topics in the paper that caught my attention in this post. (Again, the full paper is located here.)

Related blog posts–




While the paper is necessarily technical (especially, the composition of the boards of the Federal Reserve Banks), the observation of the ill effects of the current structure of the Fed is extremely important. The ultimate goal of the Fed must be to work for the entire population of the United States of America.

First, the authors noted that the lack of diversity, in terms of race, gender, and profession, as well as sectoral diversity leads to perspectives of many segments of the population being left out in monetary policy discussion. For example, the paper explained that the effect of monetary policy was not discussed in the following areas:

  • African Americans suffer disproportionately from labor market downturns and benefit markedly from economic recoveries. However, this issue was little mentioned in the Federal Open Market Committee, or FOMC, meetings.
  • A focus on inflation, the authors continued, rather than on full employment reflected the make-up of the people in the room–multimillionaire chief executive officers and other major corporate figures. People with this wealth or income have different perspectives than small business owners, debtors, students, middle- and low-income workers, and those seeking credit.

Second, the paper makes note of the need of an independent office of the inspector general. While the Board has an Inspector General, the office is not independent because the office depends on the Board for his or her position as well as for the budget to operate the office. As noted in a previous post

The Board’s [Inspector General] IG is not truly independent, rather it is an arm of the Board’s Chair. The Board’s Chair appoints the IG. (See Auerbach, Robert D. (2008), Deception and Abuse at the Fed: Henry B. Gonzalez Battles Alan Greenspan’s Bank, Austin: University of Texas Press, pages 113-115 (esp. first full paragraph on page 114).) In addition, the Board funds the operations of the IG (see, for example, Board Annual Report, 2013, page 314 (paragraph 3)).

In addition, that authors mention a recommendation of an audit by the Government Accountability Office, or GAO. It is unclear what type of audit the authors are seeking–financial or performance. It seems to be a mixture of the two. But performance audits must be carefully monitored and examined. I have discussed the weakness of the performance audit previously in the blog.

Third, the authors briefly discuss the Board’s semiannual Monetary Policy Report. Presently, the MPR is mostly historical (previous six-month period) at the time it is distributed to members of Congress. The MPR tends to be wordy, filled with distracting graphical material, and difficult to discern the points the Board is seeking to present. I think a more focused and clear report is necessary for the Board to fulfill its obligations to the public.

The authors’ proposal should be included with proposals from former Board Vice Chair Donald Kohn (presented previously in the blog).

It will be interesting to see which reforms occur as a result of this well-written paper.




Federal Reserve Board: Democratic Members of Congress Write Letter to Board–Lack of Diversity Adversely Affects Policymaking

This blog has covered several posts about the Board of Governors of the Federal Reserve System (Board), specifically about its unjust and myopic policymaking as well as its mistreatment of African American employees. The topic of this post is a recent Congressional letter to the Board (May 12, 2016).

Some Democratic Members of Congress–Senators and Representatives– wrote to the Chair of the Board, Janet Yellen, to inform Yellen and the Board of their concerns. Chief among them is the concern that the lack of diversity ill affects policymaking of the Federal Open Market Committee (FOMC). The congressional letter writers noted that the membership of the FOMC is 100% white.

A former member of the FOMC, former president of the Federal Reserve Bank of Minneapolis, Narayana Kocherlakota, stated the following observation in his blog–that the effect of race on economic policy was never discussed–particularly the high rate of unemployment among African Americans.

“Reflecting on his experience on the FOMC in a recent blog post, former Minneapolis Federal Reserve President Narayana Kocherlakota wrote: “There is one key source of economic difference in American life that is likely underemphasized in FOMC deliberations: race.”6   He reviewed the most recent full year of FOMC meeting transcripts available (2010), and found that “there was no reference in the meetings to labor market conditions among African-Americans,” although the unemployment rate for African-Americans never dropped below 15.5 percent during that year.7 It is unacceptable that discussion of the job market for these populations would be an afterthought, or worse, ignored entirely, and we are concerned that the lack of balanced representation may be a significant cause of this oversight.”

6 Narayana Kocherlakota , “MLK Day Reflection s on the FOMC,” (blog post) Narayna Kocherlakota’s Website, January 18, 2016, https://sites.google.com/site/kocherlakota009/home/policy/thoughts-on-policy/1-18-16.

7 Id.

I now summarize the remainder of the congressional letter writers concerns–

  • The Board’s failure to ensure its leadership reflects the composition of the nation, including occupational diversity.
  • When the Board reappointed the presidents of the Federal Reserve Banks, it was done without public consultation and limited transparency regarding the metrics and criteria used to evaluate the presidents’ performance or the decision to reappoint them.
  • The letter writers also request that the FOMC consider the interests and priorities of those who have not benefitted from the economic recovery. [Author’s note: It should be mentioned that Congress can act to address concerns about unemployment through fiscal policy.]

President Barack Obama: Wonderful Advice Provided to Howard University Students and People Living in the United States

Over the years, this blog has covered some of the speeches of President Barack Obama given to black audiences. The blog author took exception to them because without fail the President used the opportunity to lash black people under the guise of being of assistance. Mentions of good things would be negated with withering criticism.

With this in my mind, when the President announced that he was to give a commencement address at another HBCU–Howard University in Washington, D.C.–I was skeptical as to what the President would do with such an opportunity.

To my great relief and delight, the President’s speech was exceptional–personal and fatherly. Even the critiques were in the tone of offering not only an alternative view but also a constructive way forward.

I recommend reading this speech in its entirety (video available at http://www.whur.com/podcasts/webcasts/howard-university-commencement-2016/ (as of the date of writing of this post)), but I will provide some of the speech’s broad points.

  • Be confident in your heritage and blackness. (It is always nice to hear people affirm one’s identity positively, especially from a President who shares that identity.)
  • Black people have to be aware of injustice, unfairness, and struggle, for black people and for other vulnerable populations, including white people who also suffer from the backlash of the recession.
  • There is a need for a passion for change and also a strategy of achieving that change. In addition, people have to vote consistently. (Without question, turnout should be near 100%)
  • Change requires more than speaking but also listening to those with whom you disagree. In discussions about change be open to compromise–a compromise that may fall short of the absolute expectation but gets the process started toward that expectation (as its goal).
    • (This is the blog author’s interpretation of this section.) [In terms of people coming to colleges to speak with disagreeable views, students should attend such talks in a respectful manner, but also take notes and use the speech to fuel further research. Should research lead to questions, write a letter, blog post, column to the university student paper about it. I will say a well-formed letter assists the writer with learning but also adds to the debate and refutation of error. These talks should be seen as an opportunity for growth.]

Barack Obama: The President Nominates Dr. Carla Hayden to be the 14th Librarian of Congress

The President of the United States of America, Barack Obama, nominated Dr. Carla Hayden, chief executive officer, Enoch Pratt Free Library, Baltimore, Md., to be the 14th Librarian of Congress.

A video introduction for Dr. Hayden follows.

The position of Librarian of Congress has a 10-year term.

Civil Service Reform: Current System Not Working; Move to New System Unwise

There are calls to reform the civil service (Partnership for Public Service), but the existing civil service is not functioning properly. A number of events urges better implementation of the current civil service and caution about further strengthening authority to an unaccountable management class.


Below is a table of several topics that demonstrate that much needs to be improved under the current rules before thinking of moving to new, untested civil service system.

Civil Service Event Coverage Comment
Artis v. Bernanke, employment discrimination case at the Federal Reserve Board https://alexwdc.wordpress.com/?s=artis 18 year duration for this case represents systemic failure.
Use of forced distribution at the Federal Reserve Board https://alexwdc.wordpress.com/?s=federal+reserve
Partnership of Public Service argument for civil service reform https://alexwdc.wordpress.com/?s=partnership Group envisions economic punishment of no raises (or self-firing) in its format for forced distribution.
Merit Systems Protection Board and methods to address so-called poor performance Washington Post: http://www.washingtonpost.com/blogs/federal-eye/wp/2015/08/06/the-top-five-ways-federal-managers-fail-to-fire-their-low-performers/ Poor performance lives in ambiguity; MSPB does not even attempt to define the term used to damage or end careers.
Commerce GS-15 manager alleged of several incidents of misconduct Washington Post: http://www.washingtonpost.com/blogs/federal-eye/wp/2015/09/02/commerce-official-let-her-kids-watch-porn-on-federal-computers-then-told-investigators-she-saw-nothing-wrong-with-it/ Commerce Office of Inspector General report: https://www.oig.doc.gov/OIGPublications/OIG-14-0153.pdf
Fired civil servant who filed complaints with newspaper, his congressional representative and staff, and nonprofit group, shoots and kills security guard and himself Washington Post: http://www.washingtonpost.com/blogs/federal-eye/wp/2015/08/27/federal-employees-and-contractors-face-danger-even-death-just-doing-their-jobs/
Diversity and inclusion issues at the federal financial regulatory agencies https://alexwdc.wordpress.com/?s=diversity


In general, the situation is grim.
Non-civil-service event but informative–abusive work environment at Amazon.com. https://alexwdc.wordpress.com/?s=amazon

The New York Times: http://nyti.ms/1ISY0xv

The New York Times: http://nyti.ms/1zoKGPy (Supreme Court rules that Amazon does not have to pay employees for time spent in warehouse security lines after end of shift.)

Salon: http://www.salon.com/2014/02/23/worse_than_wal_mart_amazons_sick_brutality_and_secret_history_of_ruthlessly_intimidating_workers/

Eye-opening articles

Futility of “Colorblindness”: Meme of White Hegemony and Black Inferiority Still Exists–Unacceptable

Zora Neale Hurston
Zora Neale Hurston

In have written about the meme prevalent in the United States of America–white hegemony and black inferiority–in this blog, mostly under the title “futility of “colorblindness.”

It seems to be a continuing topic because of the formation of the #BlackLivesMatter group. Effectively, the group seeks to remove the white hegemony and black disadvantaged paradigm from policy making in the United States. This goal is a tall order but it is necessary to start moving towards it.

The United States of America: A Culture of Discrimination

Antiblack sentiment


A culture developed to subjugate nonwhite people (and the poor of all races). Matthew Cooke’s YouTube presentation, Race Baiting 101
“Colorblind” racism. https://alexwdc.wordpress.com/?s=colorblindness

Nathan Newman and J.J. Gass, A New Birth of Freedom: the Forgotten History of the 13th, 14th, and 15th Amendments



Bonilla-Silva, Eduardo (2006). “Racism without Racists:   Color-Blind Racism and the Persistence of Racial Inequality in the United States.”

President Barack Obama’s punishing slams on Black people. https://alexwdc.wordpress.com/?s=obama+colorblind

https://alexwdc.wordpress.com/2010/06/12/president-barack-obama-governance-is-slightly-different-from-the-previous-administration-other-than-style-administration-may-be-a-carbon-copy/ (see note on Ms. Shirley Sherrod)

Pervasive antiblack sentiment in the workplace Federal Reserve Board (FRB), federal financial regulatory agencies—



Artis v. Bernanke (FRB employment discrimination case)


Dick Grote, “pay for performance,” “rank and yank”—systematic removal of nonwhite persons from workforce



Overall encouragement of dangerous self-hate and punishment in order to satiate the majority culture while ignoring the systems of white hegemony Courtland Milloy: http://www.washingtonpost.com/local/institutional-racism-isnt-killing-blacks-by-itself-it-is-the-enemy-within/2015/08/25/4b9f1d98-4b50-11e5-bfb9-9736d04fc8e4_story.html

Barbara Reynolds: https://www.washingtonpost.com/posteverything/wp/2015/08/24/i-was-a-civil-rights-activist-in-the-1960s-but-its-hard-for-me-to-get-behind-black-lives-matter/

President Barack Obama (see link above)

Hilary Clinton and several members of #BlackLivesMatter:


It will not be easy. For example, the Honorable Muriel Bowser, Mayor of the city of Washington, D.C., witnessing an increase of violent crime occurring in the city, announced a proposal of more police and increased fines, in addition to other social service legislative policy ideas, to address the issue. Disagreement during the speech was heard.

There is good reason for concern, the events of the recent past (relative to the date of this post) should inform everyone that reliance on the police alone is insufficient–and dangerous. Regardless of the intentions of the Mayor, how that policy is enforced is the greater concern. The Mayor should consider these effects in her planning as well as committing herself to supervising enforcement activity for fairness.