Regional Federal Reserve Banks Think the Geithner-Bernanke-Summers Plan Is Failing the Real Economy

Torches on the right, and pitchforks on the left.

Have a happy Memorial Day weekend to all our readers in the States. US markets will be closed on Monday.

Perhaps a reminder that the freedom won by those who came before us at so dear a price should not be dealt away so easily out of fear and greed.

"But, in a larger sense, we can not dedicate – we can not consecrate – we can not hallow – this ground. The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us – that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion – that we here highly resolve that these dead shall not have died in vain – that this nation, under God, shall have a new birth of freedom – and that government of the people, by the people, for the people, shall not perish from the earth."

CentralBankNews.com
Why the regional feds are up in arms
22 May 2009
 

A number of presidents of regional Federal Reserve banks and senior staff have recently expressed dissent from the official line taken by the US authorities in managing the banking crisis.

This development may surprise central bankers in other countries, used as they are to enforcing conformity among officials of their organisation to the official line. It would be astonishing, for example, if several governors of euro-area central banks were to suddenly challenge Jean-Claude Trichet’s handling of the crisis or the crisis management policies of governments of euro member states. Collective responsibility and cover-ups are the watchwords in Europe.

The heads of the district fed banks are particularly concerned with the inequities and inefficiencies arising from official protection of banks deemed too big to fail.

Hoenig speaks out –

In April, Tom Hoenig, president of the Kansas City Fed, said that actions that had been taken in an attempt to protect the largest US institutions from failure risked "prolonging the crisis and increasing its cost."…

To those who might be surprised at such forthright criticism from a senior official, he reminded his listeners that the 12 regional banks were set up by Congress "specifically to address the populist outcry against concentrated power on Wall Street." He added: "Its structure reflects the system of checks and balances that serves us well at all levels of government, and it is the reason I am here today able to express an alternative view."

– Lacker protests

A few weeks later another senior Federal Reserve official also asserted that the implicit guarantee that the government would step in and save those institutions deemed too big to fail was a key cause of the current economic malaise…

– and Stern maintains his criticism

Gary Stern, the president of the Minneapolis Federal Reserve has also been a vociferous critic of the Fed’s bank bailouts…