Thursday, September 18, 2008

Govern This, Fed Governors

Yeah, so the air is full of despair, anger and panic. But I know one guy who's probably very, very happy this week. His name is Fred Mishkin.

Why Fred? Because he quit the Federal Reserve Board of Governors on August 31. While Mr. Bernanke and his cohorts sweat and grunt their way through our nation’s worst financial crisis since you-know-what, Mr. Mishkin is safely grading papers at Columbia.

The Fed Board of Governors is supposed to have 7 members, but only 5 mug shots appear on its website. I’m pondering our gubernatorial shortage at this rather busy Fed moment. Back in May, with Mishkin still around, the Washington Post reported:

The Fed has operated with five governors throughout the financial crisis of the past year, which has strained its current leadership. For example, because Mishkin was traveling and unreachable the night the Fed worked out an emergency loan to Bear Stearns on March 14, the central bank had to invoke a law that allows it to take such urgent action without the minimum five votes.

I propose two Fed nominations: (1) Mayor Bloomberg, because he never ever panics, and because he’s already trying to bail out the Coney Island Cyclone, and (2) Arnold Schwarzenegger, because then we can call it the Federal Reserve Board of Governators, and surely that will make us feel happier.

Factual note, in case you're interested in facts: In May 2007, Bush sent the Senate two nominations: One was Elizabeth Duke; the Senate confirmed her in June 2008, and she’s one of the 5 now serving. The other, Larry Klane, would make 6, but he hasn’t been confirmed. Though he's alleged to be a registered Democrat, Klane's nomination is languishing for political reasons. There seems to be no nominee for the 7th board seat. (Also, holdover governor Randall Kroszner - a University of Chicago free marketeer type; imagine the fun he’s having - is serving without re-confirmation.)

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