I doubt few people think the Federal Reserve is anything but a mouthpiece for the big financial institutions. And most people would be right--after all, the Fed's Board of Governors and the branches are effectively run by creatures of the banks.
But, the least we can do is make sure that we stay vigilant and hold accountable shills for the banks, who do their bidding with the cover of respectability of a phony title and try to undermine the public servants elected to protect the people.
Which brings me to the case of Kathryn S. Wylde--a case that makes abundantly clear that the Fed does not operate in the interest of the "public" as you and I might define that concept.
Yesterday, I wrote about the pressure the Obama Administration was bringing on New York's Attorney General Eric Schneiderman to get with the program. The program being that the Administration is not interested in coming down hard on the banks and Wall Street for their various corrupt and illegal practices over a long period of time, practices that led to the financial crisis, the loss of millions of jobs and the implosion of the American Dream many people had pursued, in part, through home ownership.
Nah, that crisis was so yesterday--time to move on...and make nice with business and Wall Street just as the 2012 election season (read: fundraising season) approaches.
But, what stuck with me was this tidbit:
The lawsuit angered Bank of New York Mellon, and as Mr. Schneiderman was leaving the memorial service last week for Hugh Carey, the former New York governor who died Aug. 7, an attendee said Mr. Schneiderman became embroiled in a contentious conversation with Kathryn S. Wylde, a member of the board of the Federal Reserve Bank of New York who represents the public. Ms. Wylde, who has criticized Mr. Schneiderman for bringing the lawsuit, is also chief executive of the Partnership for New York City. The New York Fed has supported the proposed $8.5 billion settlement.
Other investors in the Countrywide mortgage pools who were not part of the settlement talks between Bank of New York Mellon and Bank of America have called the terms inadequate.
Characterizing her conversation with Mr. Schneiderman that day as “not unpleasant,” Ms. Wylde said in an interview on Thursday that she had told the attorney general “it is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street — love ’em or hate ’em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible.”[EMPHASIS ADDED]
I thought: "represents the public"? What the hell does that mean? How can a shill for business, Wylde's long-term role in New York, "represent the public"?
So, I consulted the source: the Fed's New York branch's description of its directors:
Each Federal Reserve Bank has nine directors, who serve three-year terms and are divided into three groups. Class A directors represent member banks, whereas both Class B and Class C directors represent borrowers from such areas as agriculture, commerce, industry, services, labor, and consumers.[emphasis added]
It's actually kind of hilarious when you consider the list of peoplewho are considered "public representatives". OK, so, the Class B folks are elected by the banks so no surprise that James S. Tisch, President and Chief Executive Officer of Loews Corporation, would be there.
Class C directors--that's where Wylde comes in--are "appointed by Board of Governors to represent the public"...really...
That's where you can find Lee C. Bollinger, President of Columbia University, one of the largest landlords-real estate holders in the city that, under his direction, has been seizing, through eminent domain, large tracts of land from Harlem residents.
But, Wylde is no more a "public representative"--as in representing THE PUBLIC, THE PEOPLE--than the Pope is an advocate for one-night stands. She has spent a large chunk of her professional career as a mouthpiece for business and banks, a quarter of a century of that in the service of the mundanely titled "Partnership for New York City", which has been a regular forum advocating for cuts in union wages and a more "hospitable" environment for business.
I suppose in an era when the Supreme Court of the United States can rule that the sky's the limit when it comes to the corporate buying of our democracy and candidates for the White House can say, with a straight face, corporations are people, it would seem right in line to call a person a "public representative" who represents the interests of corporations and, as whenwego highlights in the comments, seems not to think that what the banks and Wall Street did falls into the indefensible category.
An additional question, though, of more importance, perhaps, is whether Wylde violated the Fed's by-laws when she tried to apply the hammer to Schneiderman. Here is what those by-laws say:
The Act purposely calls for the majority of each Board to be from the borrowing public, reflecting a concern that lenders should not dominate this oversight of Reserve Banks.
...As a Reserve Bank directorship is a form of public service, directors also must limit their participation in partisan politics. Specifically, directors should not engage in any political activity or serve in any public office where such activity or service might:
*associate the Reserve Bank with any political party or partisan political activity;
*raise questions as to the director's independence and ability to perform the duties of his or her position with the System; or
*bring embarrassment to the Reserve Bank or the Federal Reserve System.[emphasis added]
In my view, Wylde certainly ran afoul of the second and third bolded points--and it could be argued the first point if you believe that holding the banks accountable is a political statement.
Confronting an elected representative of THE PEOPLE--the attorney general of New York--who is doing his job and demanding that he essentially get with the program is a blatant crossing of the line of "independence". Wylde was acting as an enforcer for the banks and, as the by-laws clearly state, the role of the directors--particularly those who are "public representatives"--is to make sure "that lenders should not dominate..."
As for bringing embarrassment to the Fed, that is a no-brainer.
She should be told to resign.
That won't happen, candidly. The transcribers of press releases (formerly known as "journalists") are too incompetent or lazy to read documents or challenge the Fed. And most of our elected officials, in both parties, continue to promote the idea of foolish idea of the "independence" of the Fed--which, as I've pointed out for a long time, is a myth.
But , that doesn't mean we should be silent when mouthpieces for the banks try to get in the way of public servants who are just trying to do the job they were elected to do by THE PEOPLE.