Here’s Why Hillary Clinton’s Federal Reserve Plan Is A Big Deal-Progressive nerds love the idea.
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Here's why Hillary Clinton's Federal Reserve plan is a big deal http://www.huffingtonpost.com/entry/hillary-clinton-federal-reserve-plan_us_57363ac4e4b08f96c1833ad3 #ImwithHer #uniteblue
Here’s Why Hillary Clinton’s Federal Reserve Plan Is A Big Deal
Progressive nerds love the idea.
05/14/2016 10:01 am ET
Zach Carter
Senior Political Economy Reporter, The Huffington Post
Hillary Clinton just backed an obscure financial reform proposal that could have a huge effect on how the Federal Reserve is run.
On Thursday, Hillary Clinton endorsed a banking reform idea that is more progressive than anything she backed during her long primary battle with Bernie Sanders. Compared to high-profile proposals like breaking up the banks, the plan Clinton backed is a narrow change, but an important one that nerdy liberal activists have been championing for years. Put simply, Clinton wants to shift the balance of power at the Federal Reserve away from private banks in favor of democratic accountability.
The Fed is the most powerful economic institution in the world, and perhaps the strangest. The central bank’s Board of Governors in Washington, D.C., is a government entity run by presidential appointees who must be confirmed by the Senate. But the 12 regional Federal Reserve Banks that perform the bulk of the central bank’s grunt work — handling and processing reserves — are technically owned by banks. This ownership doesn’t mean much in terms of direct earnings; the banks can’t sell their Fed stock, and the regional Fed banks don’t turn a profit.
The trouble is that the regional Fed banks have a lot of power over the Federal Open Market Committee — the key panel that sets interest rates, directing a tremendous amount of U.S. economic activity. Private banks do have a lot of influence over who manages the Fed’s regional outposts through board of director positions. Directors selected by bankers help choose the president of each Fed outpost. These presidents, in turn, serve on the key committee that sets interest rates. On Thursday, Clinton called for getting bankers out of that process.
If it all sounds terribly complicated, it is. But the bottom line is that Clinton called to replace one form of banker influence over public policy with a system of democratic accountability. That would be a concrete, progressive change to the status quo. And despite her rhetoric on the campaign trail, the key element of Clinton’s financial platform has been to implement existing law.
