Catch of the Day: Obama's Damaging Neglect of the Fed
The Catch goes to Matt Yglesias, who writes today about "the biggest mistake of Obama's presidency: the systematic neglect of the Federal Reserve and of his ability to influence its course of action." Yglesias notes that two Fed seats remain vacant and without nominees. He gives the sorry history of disregard during the Obama administration and the probable consequences:
This is a failure that sounds boring, but has likely doomed millions of people to needlessly long spells of unemployment, permanently reduced the structural capacity of the American economy, and through poor macroeconomic performance reduced his political ability to drive change in environmental policy, bank regulation, and other areas.
It gets worse. Fed Board member Jeremy Stein announced at the beginning of April that he would leave, so that means President Barack Obama has sat on that one for five months (and it's possible that Stein gave the administration advance notice). And Sarah Bloom Raskin's seat has been open since she was confirmed for her Treasury job in mid-March, but she was nominated for that position on July 31, 2013. That's more than 13 months of neglect, and it's simply inexcusable.
As Yglesias explains, the top job on the Fed Board gets all the headlines, but like her predecessors, Chair Janet Yellen seeks to build consensus. That would be a lot easier to do with more Obama-appointed people at her side to help overcome the less controllable (for the presidency) input from the regional representatives of (basically) private banking.
Some of this is a consequence of the general breakdown of the executive branch nomination process, for which both the Senate and the presidency deserve blame. But I agree with Yglesias: Some of this is clearly the result of this particular president undervaluing the importance of these positions. With important, and quite awful, consequences. And although Obama seems to have improved on appointing judges, the two Fed openings indicate he's learned nothing when it comes to the central bank.
So: Great catch!
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To contact the author on this story:
Jonathan Bernstein at firstname.lastname@example.org
To contact the editor on this story:
Max Berley at email@example.com