With Spotlight, the focus is now focused on the leadership of the Federal Reserve, some serious warnings about the possible threats for the fed’s “freedom”. However, such statements have barely mentioned the need for democratic accountability and have not given any reference to the US Constitution.
Every student learns that our Constitution established three branches of the government: Executive, legislative and judicial. This is not allowed to be a completely independent “fourth branch” for the Fed.
Constitution exclusively gave duty to Congress“Regulation the price”Money, and the Congress has entrusted Fed to that responsibility. Thus, the Congress should act as a boss of Fed.
Under the current law, however, the Fed has such extensive powers that it effectively acts as an independent monarchy rather than an agency of the Congress. Indeed, the powers of the Fed are more than every other federal agency and every other major central bank.
- Budget: Unlike other agencies, Fed is fed Sole right To determine the budget for your buildings and operations. In contrast, other major central banks present their budget for approval by an overseas body (for example, Canada, Norway, Sweden, Switzerland And this United kingdom,
- Asset purchase,over the past two decades,Fed balance sheetThe expansion is 10 times. The purchase of the Fed in 2020-21 took a high interest rate risk, which is now the cost of taxpayersMore than $ 1 trillion,
- Issue of loan:The fed is uniquely authorized to borrow money from the public to meet its operating deficit. The Constitution assigned the Congress with the duty of overseeing the country’s debt, but the responsibilities of the fed have been exempted from the debt limit of the Congress.
- Salary:Fed determines the compensation of its employees, many of which are paid more than the President. In fact, the top fed is the salary of employeesRoughlyHis counterparts in other federal departments and agencies.
- Buildings:Fed now completing$ 3.1 billion three buildings upgradeAbout 2,400 Fed are used by the staff, and its headquarters will soon be one of the most.Expensive structuresIn this world. In contrast, the European Central Bank is now in the processReducing your headquarters in frankfurtFor two buildings instead of three.
- External review, The Government Accountability Office conducts extensive reviews of every other federal agency, but can only review the specific fed operations. In addition, Fed is the Inspector General of Fed Fed -appointed employee Who works under the “Authority, Disha and Control” of Fed Chair on all policy-related matters .. In contrast, the performance of Bank of England is reviewed Independent assessment office And by UK National Audit OfficeWhile the performance of European Central Bank is reviewed by the European Court of Auditors.
Fed’s internal regime has clearly shifted away from itselfIntended reagentAs a commission made of an array of individually accountable experts.
For approximately a century, the head of each regional Federal Reserve Bank was elected by its board of directors, with the “Light Touch” oversight from the Federal Reserve Board at Washington DC.
Since 2015, however, the Fed Board has beendirectly involvedIn all stages of selecting new Fed bank presidents, which are now seen as “SubordinateOf Fed Board.
The Fed Board has seven members, who have stated words – a design in which the Fed Chair will be “the first amidst equal”, similar to the role of the Chief Justice of the Supreme Court. In practice, however, the Fed chair has a major roleActive executive officerWhile other board members have non-functional roles.
Thus, employees areFully accountableFor Fed Chair, which determines what information will be shared with the rest of the Fed Board. For example, in 2023, Fed published an important report about the failure of the Silicon Valley Bank, even though it reported that report.Never shownMany Fed Board members before publication.
Of course, Fed is not literally a monarchy, but its characteristics are similar to a sovereign unit. And the fed’s transparency and lack of accountability are eradicating its credibility and reducing its effectiveness in fulfilling its mission.
Thus, the Congress should now take immediate steps to fulfill its constitutional duty to serve as Fed’s boss.
Fed budget should be included in the federal budget. Fed must be nearPresidential appointed Inspector GeneralLike every other major federal agency, and GAOs should be authorized to conduct extensive reviews of Fed’s programs and operations.
And a Blue-Ribbon Commission should examine the institutional structure of the Fed and submit a specific set of recommendations to be considered by the Congress.
Andrew t. Levin is a professor of economics at Dartmouth College.
