Federal Reserve Board: H.2 Release for Week Ending April 15, 2017; H.4.1 Release (Balance Sheet) for Week Ending April 20, 2017; Two “Of Note” Items


Of Note:

Is the United States becoming a two nations: One side with the wealth and the expectation of the so-called American Dream, and the other side with precarious employment, dispair, and everlasting debt? A web article (h/t naked capitalism blog) says yes.

Lynn Parramore, “America Is Regressing into a Developing Nation for Most People.” (Parramore is a Sr. Research Analyst with the Institute for New Economic Thinking.) Parramore describes an observation of a book, The Vanishing Middle Class: Prejudice and Power in a Dual Economy, by Peter Temin, Professor Emeritus of Economics at MIT. Temin stated–

The richest large economy in the world, says Temin, is coming to have an economic and political structure more like a developing nation. We have entered a phase of regression, and one of the easiest ways to see it is in our infrastructure: our roads and bridges look more like those in Thailand or Venezuela than the Netherlands or Japan. But it goes far deeper than that, which is why Temin uses a famous economic model created to understand developing nations to describe how far inequality has progressed in the United States. The model is the work of West Indian economist W. Arthur Lewis, the only person of African descent to win a Nobel Prize in economics. For the first time, this model is applied with systematic precision to the U.S.

The result is profoundly disturbing.

In the Lewis model of a dual economy, much of the low-wage sector has little influence over public policy. Check. The high-income sector will keep wages down in the other sector to provide cheap labor for its businesses. Check. Social control is used to keep the low-wage sector from challenging the policies favored by the high-income sector. Mass incarceration – check. The primary goal of the richest members of the high-income sector is to lower taxes. Check. Social and economic mobility is low. Check.

In the developing countries Lewis studied, people try to move from the low-wage sector to the affluent sector by transplanting from rural areas to the city to get a job. Occasionally it works; often it doesn’t. Temin says that today in the U.S., the ticket out is education, which is difficult for two reasons: you have to spend money over a long period of time, and the FTE sector is making those expenditures more and more costly by defunding public schools and making policies that increase student debt burdens.

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Another eye-opening article was at Bloomberg, “A Quarter of Millennials who Live at Home Don’t Work–or Study

Key quote:  According to the report, The Changing Economics and Demographics of Young Adulthood: 1975–2016

Almost 9 in 10 young people who were living in their parents’ home a year ago are still living there today, making it the most stable living arrangement for young adults,” the report said. “In 2005, the majority of young people lived independently in their own household (either alone, with a spouse, or an unmarried partner), which was the predominant living arrangement in 35 states. By 2015—just a decade later—only six states had a majority of young people living independently.

Recall that the Great Recession was in 2008. And, in order to start a household, one needs a secure job and a sufficient wage to support this activity.


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 April 15, 2017, is below.

H.2 Release–Actions of the Board, Its Staff, and the Federal Reserve Banks; Applications and Reports Received

Category Action Taken
Banks, Foreign Nordea Bank AB (publ), Stockholm, Sweden — to establish a branch in New York, New York.

-Approved, April 12, 2017

Enforcement The Baraboo Bancorporation, Inc., Baraboo, Wisconsin — written agreement issued April 30, 2013, terminated April 7, 2017.

-Announced, April 11, 2017

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 April 20, 2017, 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 April 19, 2017):  $4,525,602 (in millions of dollars). (On September 26, 2007, this amount was $900,473 (in millions of dollars)).

(See the release for further information.)

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Federal Reserve Board: H.2 Release for Week Ending March 25, 2017; H.4.1 Release (Balance Sheet) for Week Ending March 30, 2017; Three “Of Note” Items


Of Note

According to a Reuters report, The Federal Reserve could gradually wind down its balance sheet, N.Y. Fed President, William Dudley said.

(Update on the Fed’s $4.5 billion balance sheet is below.)

Chair Janet Yellen gave a speech entitled “Addressing Workforce Development Challenges in Low-Income Communities,” at “Creating a Just Economy,” the 2017 annual conference of the National Community Reinvestment Coalition, Washington, D.C.

Comment:  The Chair encouraged entrepreneurship in workforce development, but also observed that capital for such small businesses is hard to find because of factors like “[a] lack of a credit history or a poor credit history and limited collateral–for example, home equity.”

The two observations cancel each other out.

[I cannot help being a bit disappointed with the presentation of this unworkable idea–a possible sign of Fed disinterest. If you must encourage Congress to act (with research and practical, real-world findings), do so, Chair Yellen, rather than give out discouragement.]

United States (population: 308,745,538) (2010 Census)

Race

Percentage of population

Number

White

72.4

223,553,265

Black

12.6

38,929,319

Native American

0.7

540,013

Asian

4.8

14,674,252

The Board published its 2017 Report to the Congress on the Office of Minority and Women Inclusion. (Note: This blog will prepare and post a synopsis of this report in the near future.)


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 March 25, 2017, is below.

H.2 Release–Actions of the Board, Its Staff, and the Federal Reserve Banks; Applications and Reports Received

Category Action Taken
Personnel Division of Monetary Affairs — appointment of Laura Lipscomb as assistant director and Edward Nelson as senior adviser.

-Announced, March 21, 2017

 

Management Division — appointment of Winona Varnon as deputy director and David Capp as senior adviser.

-Approved, March 22, 2017

 

Supervision and Regulation Resolution Plans — joint Board and Federal Deposit Insurance Corporation guidance on the resolution planning requirements of the Dodd-Frank Act for four foreign banking organizations (FBOs) (Barclays PLC, Credit Suisse Group AG, Deutsche Bank AG, and UBS AG); and extension to July 1, 2018, of the FBOs’ 2016 and 2017 resolution plan submission dates.

-Approved, March 22, 2017

 

Resolution Plans — joint Board and Federal Deposit Insurance Corporation feedback on the December 2015 resolution plans of 16 domestic banking organizations; and instructions and guidance for the development of the firms’ December 2017 resolution plans, in accordance with the Dodd-Frank Act.

-Approved, March 22, 2017

 

Enforcement HCSB Financial Corporation, Loris, South Carolina — written agreement issued May 9, 2011, terminated March 21, 2017.

-Announced, March 23, 2017

 

Santander Holdings USA, Inc., Boston, Massachusetts; and Santander Consumer USA Inc., Dallas, Texas — written agreement with the Federal Reserve Bank of Boston.

-Announced, March 23, 2017

 

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 March 30, 2017, 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 March 29, 2017):  $4,515,652 (in millions of dollars). (On September 26, 2007, this amount was $900,473 (in millions of dollars)).

(See the release for further information.)

Federal Reserve Board: H.2 Release for Week Ending March 18, 2017; H.4.1 Release (Balance Sheet) for Week Ending March 23, 2017

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 March 18, 2017, is below.

H.2 Release–Actions of the Board, Its Staff, and the Federal Reserve Banks; Applications and Reports Received

Category Action Taken
Bank Holding Companies Cathay General Bancorp, Los Angeles, California — to acquire SinoPac Bancorp, Los Angeles, and thereby indirectly acquire Far East National Bank.

-Approved, March 17, 2017

 

People’s United Financial, Inc., Bridgeport, Connecticut — to merge with Suffolk Bancorp, Riverhead, New York, and thereby indirectly acquire Suffolk County National Bank of Riverhead.

-Approved, March 13, 2017

 

Regulations and Policies Regulatory Burden Reduction — interagency report to Congress on the review of regulatory burden, pursuant to the Economic Growth and Regulatory Paperwork Reduction Act.

-Approved, March 9, 2017

(A/C)

 

Enforcement J.P. Morgan Securities (Asia Pacific) Limited, Hong Kong, China — issuance of notices of intent to prohibit and notices of assessment of civil money penalties against Fang Fang and Timothy Fletcher, former institution-affiliated parties.

-Approved, March 9, 2017

 

Platte Valley Bank, Scottsbluff, Nebraska — issuance of a consent order of assessment of a civil money penalty.

-Announced, March 7, 2017

 

Of Note: The International Monetary Fund Warned the United States about Its High Rate of Poverty

 

On June 22, 2016, the International Monetary Fund (IMF) warned the United States about a high rate of poverty despite an overall strong economy. Forty percent of those in poverty work.

There is an urgent need to tackle poverty. In the latest data, 1 in 7 Americans is living in poverty, including 1 in 5 children and 1 in 3 female-headed households. Around 40 percent of those in poverty are working. A more generous earned income tax credit (including eligibility for workers without dependents, those under 25, and older workers that are not yet eligible for social security) combined with a higher federal minimum wage would help alleviate poverty.”

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 March 23, 2017, 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 March 22, 2017):  $4,524,545 (in millions of dollars). (On September 26, 2007, this amount was $900,473 (in millions of dollars)).

(See the release for further information.)

The Futility of “Colorblindness”: GOP Representative Robert Pittenger’s Comments On BBC Program Expressed True Belief of Republicans Against Black People and the Vulnerable Members of U.S. Society

The Republican party (GOP) has an authoritarian backbone: The party worships the rich, like GOP nominee for U.S. President, Donald J. Trump (who received $885 million in real estate-related tax breaks), and disparages the vulnerable (otherwise known as the 99%).

The focus of GOP action is the removal of President Lyndon Baines Johnson’s programs to assist the vulnerable (and give all support to the 1% (who provide “campaign contributions”). In addition, the government bailed out the financial industry after the 2008 financial crisis. One result of that is that the Federal Reserve Board has a balance sheet of $4.5 trillion (as of the date of this post).

Representative Paul Ryan delivered his belief in blaming the poor. Given his Irish ancestry, a New York Times columnist, Timothy Egan, reminded Ryan that the English had the same idea toward his ancestors in Ireland.

In North Carolina, there has been another police-involved shooting, which has left a citizen dead. While the officer is black, the situation is the same all previous police-involved shootings where the officer involved claims his life was in danger and the authorities sanction the resultant killing as justified (under Tennessee v. Garner and Graham v. Connor).

With this situation as background, a North Carolina GOP member of the U.S. House of Representatives, Robert Pittenger (under investigation by the FBI and the IRS), had an interview of BBC’s Newsnight program, with the BBC’s James O’Brien. During the interview, Mr. Pittenger saw fit to disparage the protestors as

  • not following the example of the late Reverend Dr. Martin Luther King (who was assassinated) and
  • haters of white people because of their presumed success.

His critique was framed by the GOP’s continued disparagement of the vulnerable members of society, just like Ryan and the rest of the GOP. Mr. Pittenger simply ignored all of the history and ill effects of policies based on “colorblind” white hegemony.

His subsequent explanations do not alter his (or the GOP’s) beliefs that he expressed openly during the BBC interview.

Unsurprisingly, also in the BBC interview, Mr. Pittenger refused to apply the example of Rev. King’s actions (which he applied to protestors) to the present-day campaign of Donald J. Trump who has insulted many groups in his statements.

Ryan Lochte: When Wealth, Athletic Ability, Nationality, Race, and Gender Blurs Accountability–His Story of Armed Robbery Collapsed; Teammates Held in Brazil to Provide Statements, while Lochte Is in the United States

Ryan Lochte, 32, competed as a swimmer in the 2016 Summer Olympics in Rio de Janeiro, Brazil. After completing his events, however, he became involved in an incident outside of the Olympic Village.

On Sunday August 14, 2016, Lochte stated that he had property taken at gunpoint in an interview with NBC’s Billy Bush. Present with Lochte were U.S. Olympic teammates Gunnar Bentz, Jack Conger, and James Feigen. Lochte continued his account, with some changed details, in an interview with Matt Lauer on August 18 (http://www.today.com/news/ryan-lochte-defends-rio-robbery-account-matt-lauer-we-wouldn-t101973).

Lochte also posted a statement on his Instagram account.

Brazilian authorities conducted an investigation and found that the facts did not accord with Lochte’s version of events. (In addition, Brazilian police recommended that the prosecutor file charges against Lochte and Feigen (the elder men of the four) for filing a false police report of a crime.)


[Update (August 19, 2016): Ryan Lochte offers a so-called apology second explanation for the incident in Brazil. (Media in the United States are far too lenient (yet also way too inclusive) with the word “apology.” It’s shameful. Lochte said he was robbed of his property at gunpoint with NBC’s Billy Bush on Sunday August 14, 2016. This so-called statement is unacceptable.)

Separately, as reported in the Washington Post, James Feigen will make a payment of $10,800 to a Brazilian charity, Instituto Reação (in Portuguese), and will then be free to leave Brazil.]


Seeming to want to refocus attention on the Olympic Games, a spokesman for the International Olympic Committee, Mario Andrada, asked for people to consider the event an occurrence of error.

“These kids tried to have fun, they tried to represent their country to the best of their abilities,” Andrada said. “They competed under gigantic pressure. Let’s give these kids a break. They had fun, they made a mistake, life goes on.”

Kids? It is necessary to mention the ages of the adult athletes involved:

Name Age Net Worth
Ryan Lochte 32 (3-Aug-84) (estimated net worth of $3 million)
Gunnar Bentz 20 (3-Jan-96)
Jack Conger 21 (26-Sept-94)
James Feigen 26 (26-Sept-89)

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The swimmers involved are young adults, not children. In addition, the statement gives a broad latitude to excuse  misbehavior by athletes. That Lochte left his teammates to carry the weight of this situation shows his unwillingness to accept responsibility for one’s actions and failure to support his friends/fellow teammates. (Also, one must consider whether an equivalent light hand would be offered to nonwhite athletes (or athletes from non-wealthy nations).)

All is not lost if Lochte sorts out and repairs this unfortunate event, including paying for damages to the gasoline station and making amends with the authorities of the Olympic host city of Rio de Janeiro. If not, then Lochte has lost my respect.

[Author’s Note: The other three seem to have been caught up in this cover-up situation and left to fend for themselves. I do believe that a second chance is merited (for these 3). If only this mercy were universally provided to all human beings who make mistakes, the world would be a much better place.)]

Of note: Amini Fonua, swimmer and Olympic athlete from Tonga, posted a tweet in support of Feigen.

Futility of “Colorblindness” and Fareed Zakaria: In His Program “Why They Hate Us?” Zakaria Defends Muslims at the Expense of Black People; Zakaria, Thus, Is a Dangerous Hypocrite

I distrust percentages stated alone, especially those drawn from the malleable area of statistics, unless those percentages are surrounded by the raw numeric data from which they are derived. The abstract nature of percentages by themselves without solid context leads to problems.

Such problems are magnified when they involve racial issues in the United States. The acceptability of ruining black people for just being black has long been present in the culture of the United States of America. So, the sloppiness of Fareed Zakaria’s reporting in this area cannot be accepted. In defending his Muslim people, he casually and brutally attacked black people, a practice that is well established in the practice of white supremacy.

Only in his case, Zakaria delivered the punch and then cynically tried to apply a soothing balm of explanation that one cannot rabidly hate the entire group of which he accused 50% of the members of being murderers. This is simply beneath dignity, and I cannot accept Zakaria’s work as being valid ever again.

Here is Zakaria’s quotation from his program “Why They Hate Us?”:

But here’s another way to think about this. In America, African-Americans make up about 13% of the population, yet they comprise about 50% of homicide offenders, according to a Justice Department study. Now we understand — I hope we understand — that when we see a black man on the street, we cannot and must not treat him as a likely criminal. It would be dehumanizing, unfair and racist. In America, of all places, people should be treated as individuals and not as stereotypes from a racial, ethnic or religious group. And remember, the Bangladeshi cabdriver who drives you to the airport has nothing, nothing to do with ISIS, even though he is also a Muslim.

 

United States (population: 308,745,538) (2010 Census)

Race Percentage of population Number
White 72.4% 223,553,265
Black 12.6 38,929,319
Native American 0.7 540,013
Asian 4.8 14,674,252

The issue I have is the casual implication that Zakaria presents as fact and then attempts to explain and defend–in so many words, even though I implied that 19 million black people commit murder, you the viewer cannot therefore hate all black people. This quotation is simply sloppy reporting, factually incorrect, cowardly, and categorically unacceptable.

For an example, here are the number for murders in 2013 from the Federal Bureau of Investigation.

Murder
Race, Ethnicity, and Sex of Victim by Race, Ethnicity, and Sex of Offender, 2013
[Single victim/single offender]
Race of victim      Total Race of offender Sex of offender Ethnicity of offender1
White Black or

African

American

Other1 Unknown Male Female Unknown Hispanic

or Latino

Not

Hispanic

or Latino

Unknown
White 3,005 2,509 409 49 38 2,661 306 38 532 945 1,528
Black or African American 2,491 189 2,245 20 37 2,217 237 37 76 807 1,608
Other race2 159 32 27 96 4 142 13 4 10 63 86
Unknown race 68 25 17 3 23 38 7 23 3 14 51

The truth is only a minuscule subset of the total black population commit homicide (2,491/38,929,319=0.0001 ). Whites commit homicide also (something that Zakaria does not even state for context–the number is similarly small based on population); moreover, when Dylann Roof killed (note: as of the date of this post, Roof is still awaiting trial) 9 people in Charleston, South Carolina, no one painted the entire white population of the United States as a homicidal, bloodthirsty group of people.

Zakaria’s failure in the midst of defending his own people from broad-brush attacks has not gone unnoticed; I am extremely disappointed in his sloppy work product in failing to carefully craft every element of his reporting. He has recklessly left black people exposed to further unfair discrimination; it is disgustingly unacceptable.

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.]