I wanted to start off our book club on Peter Conti-Brown's engaging and thoughtful book, "The Power and Independence of the Federal Reserve," with a quick reference to the big news of the day. One of Conti-Brown's key points is that we should care more about the people who run the Fed -- their backgrounds, educations, ideology, and policy goals. In making his point, Conti-Brown draws a comparison between the appointment of the Fed chair and the process underway (or maybe not so much underway) with Judge Garland:
Just as senators spar with judicial appointees over the latter's views on, say, abortion or the death penalty, they should expect (and, hopefully, receive) insight into what the central bankers' views are on such ideas as the monetary policy rules, forward guidance, and the other theoretical and empirical components of influential topics in macroeconomics. (p. 235)
Conti-Brown also argues that Fed appointments should be more politicized, as such attention provides "a tremendous amount of insight and accountability to how much personalities matter in shaping the power and policies of the Federal Reserve System." (p. 240) Personalities matter because the Fed's power is by design flexible and difficult to cabin with specific rules or regulations. At the same time, some level of democratic oversight is necessary to prevent industry capture (or, at least, industry culture capture) or unexpected policy shifts from occurring. Along these lines, Conti-Brown also argues that the President should have a broader power of appointment over a larger number of Fed staff members, particularly the general counsel.
I just wanted to press a little bit on Conti-Brown's point and ask: to what extent should the Senate exercise its own discretion in reviewing appointments to the Fed? As Conti-Brown skillfully illustrates in his historical discussion, the Fed must walk a tightrope between a lack of accountability to the people, on the one side, and too much accountability on the other. Many commentators have bemoaned the rising visibility of the Fed's role in the economy, in fear that populism and politics may lead the Fed astray. Similar arguments have been raised about the Supreme Court appointment process: namely, that nominations have become too political, too ideological, and too heated. Those Senate Democrats who rejected the nomination of Robert Bork are often blamed for this development. "Borking" has become a verb that means to pillory a judicial nominee for her or his ideology in an over-hyped and inflammatory manner.
So my question is: to what extent should the Senate be allowed to "Bork" a nominee to the Fed? What discretion should Senators have in voting down a president's nominee for Fed chair? Conti-Brown wants more accountability, participation, and politicization. But I'd be interested in hearing how big a scoop he is looking for.
I was amused when Kai Ryssdal opened "Marketplace" with "Garland, Yellen -- Yellen, Garland . . . We're going with Janet Yellen every single time!" At least when it comes to Ryssdal and his program, the Fed gets more attention than a new Supreme Court nominee. My guess is that Conti-Brown approves!