h1

The Real Fed News

October 19, 2009

The Real Fed News

IBD: 26 Aug. 2009

Monetary Policy: The renomination of Fed chief Ben Bernanke to a second term came as no big surprise. The same can’t be said for the naming of a union activist as head of the New York Federal Reserve.


Read More: Economy


UNION

Denis Hughes, president of the AFL-CIO in New York, has served as interim head of the New York Fed board since May. His ascent to one of the world’s most important financial posts is another troubling sign of this administration’s too-tight embrace of organized labor.

Understand, this is a time of great financial peril. That’s the main reason why Bernanke was renominated. The idea of changing Fed leaders in the middle of a financial crisis was too much.

Bernanke has printed close to $2 trillion in new money to help refloat the economy. President Obama is no doubt happy — if for no other reason than it will let the White House claim its $787 billion “stimulus” is the real reason the economy’s starting to grow again.

But the naming of Hughes as the top banker at the New York Fed is the real news. And it’s quite astounding.

He has no significant finance experience. Nor does his educational background — “Brother Hughes,” as the AFL-CIO’s Web site calls him, has a B.S. degree from the Harry Van Arsdale School of Labor Studies at Empire State College — reassure us.

Of greater concern is his career as a bought-and-paid-for union official and political operative. The New York Fed chairmanship is hardly a place for a person whose entire career has been spent fighting and strong-arming the very people he’ll now be regulating.

As American Thinker editor Ed Lasky put it, Hughes is someone “who may be more schooled in extracting concessions from corporate America than the intricacies of high finance.”

Exactly. More to the point, can those on Wall Street who come before him in routine regulatory matters expect fair treatment? Will union issues become part of the New York Fed’s agenda? Will banks find requests to expand or merge stymied because unions fear a loss of jobs somewhere?

These are more than just academic questions. The New York Fed is the primus inter pares, the first among equals, of all the Fed banks. It is the bank that executes the Fed board’s will in the marketplace. It is the on-site regulator of Wall Street, playing, as its Web site says, “a leadership role in monetary policy, financial supervision and the payments system.” Now it’s headed by a union shill.

Putting this key Fed bank in the hands of a person whose experience suggests a bred-in-the-bone hostility to capitalism strikes us as bizarre at best and dangerous at worst. And it bears the unmistakable imprint of the White House. Just last week we wrote about plans to elevate former United Steelworkers adviser Ron Bloom from head of the auto task force to “industrial policy czar.”

Putting so many union people in powerful positions of economic policymaking is a recipe for disaster. Since 1955, the share of the workers belonging to unions has plunged from 33% to about 11%. Still, though increasingly unpopular, unions have helped wreck two major industries: autos and steel. Not much of a track record.

But now, through politics, unions are getting rewarded with control of the economy — a very bad omen for American capitalism.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: