Fed Coming Under Pressure From Both Left and Right

7:03 am ET
Nov 19, 2014

Abenomics

Grand Central: Fed Coming Under Pressure From Both Left and Right

 

The Wall Street Journal’s Daily Report on Global Central Banks for Wednesday, November 19, 2014:

 http://blogs.wsj.com/economics/2014/11/19/grand-central-fed-coming-under-pressure-from-both-left-and-right/

 

HILSENRATH’S TAKE: FED COMING UNDER PRESSURE FROM BOTH LEFT AND RIGHT

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When Republicans won control of the Senate earlier this month, it looked like the Federal Reserve was about to become a target of newly empowered conservatives in Congress. The Republican Party has been critical of the Fed’s monetary policy decisions and its performance as a financial supervisor and is pushing for more formal scrutiny of the central bank.
What’s striking this week is how much pressure the Fed is also facing from the left, particularly the Federal Reserve Bank of New York.

As my colleague Victoria McGrane reports, Sen. Jack Reed, a Democrat from Rhode Island, has introduced legislation that would require that the New York Fed president be nominated by the President and confirmed by the Senate, subjecting the powerful position to a political process which it now escapes.
Under current law, the president of the New York Fed is chosen by its own board of directors, with heavy consultation from Washington’s congressionally confirmed Board of Governors. This is an idea that came up during the Dodd-Frank debates, but which the Fed successfully resisted.
Meantime, Senate Democrats Elizabeth Warren, of Massachusetts, and Joe Manchin, of West Virginia, have penned a commentary for the WSJ’s editorial pages calling on the President to nominate tough bank supervisors to fill two empty seats on the Board of Governors.
And Ohio Democrat Sherrod Brown is holding a Senate subcommittee hearing Friday on the New York Fed’s performance overseeing banks. New York Fed president William Dudley will be the star witness.
Many observers have been wondering where Republicans and Democrats can find common ground in a deeply divided Washington political scene. There is a great deal they disagree about when it comes to central banking. But the stars may be aligning for a new bipartisan challenge to Fed governance and its oversight of the nation’s banking system.

-By Jon Hilsenrath