Cancel property in the federal reserve

With the lights that now focused on the Federal Reserve leadership, there were some terrible warnings about the possible threats to the Federal Reserve Bank. However, such statements barely mentioned the need for democratic accountability and did not indicate any reference to the US constitution.

Each student learns that our constitution has established three branches of the government: executive, legislative and judicial. It is not permissible for the Federal Reserve to be a fourth fourth branch.

The constitution specifically gave Congress the duty to “organize the value” of money, and Congress has authorized this responsibility towards the federal reserve. Consequently, Congress should serve as the head of the Federal Reserve.

Under the current law, the Federal Reserve has broad powers that it works effectively like independent ownership instead of Congress. In fact, the powers of the Federal Reserve go beyond the bases of each other federal agency and each other main central bank.

• budget: Unlike other agencies, the Federal Reserve has a single power to determine the budget of buildings and operations. In contrast, other major central banks offer their budgets to approve by the Supervisory Authority (for example, Canada, Norway, Sweden, Switzerland and the United Kingdom).
• Buy assets:Over the past two decades, the public budget of the Federal Reserve has expanded 10 times. The purchases of the Federal Reserve in 2020-21 incurred huge risks of interest rates now costing taxpayers more than $ 1 trillion.
• Debt version:The Federal Reserve is uniquely authorized to borrow money from the public to finance its operational losses. The Constitution appoints Congress with the duty to oversee the nation’s debts, but the obligations of the Federal Reserve Bank are exempt from the roof of Congress.
• Salaries:The Federal Reserve specifies compensation for its employees, many of whom are paid more than the president. In fact, the salaries of senior federal reserve employees are the weak salaries of their counterparts in other federal departments and agencies.
• Buildings:The Federal Reserve is now completing a $ 3.1 billion upgrade from three buildings used by about 2,400 Federal Reserve employees, and will soon be one of the most expensive structures in the world. In contrast, the European Central Bank is now in the process of reducing the size of its headquarters in Frankfurt into two buildings instead of three.
• External reviews: The Governmental Accounting Office conducts comprehensive reviews for each other federal agency, but it can only make limited reviews of the specific federal reserves. Moreover, the Inspector General of the Federal Reserve is an employee appointed by the President of the Federal Reserve, who works “under the authority, guidance and control of” the President of the Federal Reserve on all matters related to politics .. In contrast, the performance of the Bank of England is reviewed by an independent evaluation office and the National Audit Office in the United Kingdom, while the European Central Bank performance is reviewed by the European Court.

The internal governance of the Federal Reserve Mourning has shifted significantly from its intended design as a committee consisting of an individually responsible experts.

Nearly a century ago, the Chairman of the Regional Federal Reserve was chosen by the Board of Directors, with the monitoring of “Light Touch” from the Federal Reserve in Washington, DC

However, since 2015, the Federal Reserve participated directly in all stages of selecting the heads of the New Federal Reserve Bank, who are now seen as “subordinates” of the Federal Reserve.

The Federal Reserve includes seven members who have overlapping conditions – a design in which the President of the Federal Reserve will be “the first between equality”, similar to the role of the President of the Supreme Court. In practice, however, the Federal Reserve Chairman has a dominant role as an active executive official, while other members of the Board of Directors have non -executive roles.

Consequently, only employees are responsible for the Federal Reserve Chair, which determines the information that will be shared with the rest of the Federal Reserve. For example, in 2023, the Federal Reserve published a major report on the failure of the Silicon Valley, although this report did not appear to several members of the Federal Reserve before its publication.

Of course, the Federal Reserve is not a royal literal, but its characteristics are frighteningly similar to the characteristics of a sovereign entity. The lack of federal reserves leads to transparency and accountability for the erosion of its credibility and undermining its effectiveness in carrying out its mission.

Consequently, Congress must now take immediate steps to fulfill its constitutional duty to work as the head of the Federal Reserve.

The Federal Reserve Budget should be combined into the federal budget. The Federal Reserve must have a general inspector who is appointed by the presidency exactly as in all other major federal agency, and GAO must be allowed to conduct comprehensive reviews of the FBI programs and operations.

The Blue Ribon Committee must study the institutional structure of the Federal Reserve and make a specific set of recommendations seen by Congress.

Andrew T. Levin is a professor of economics at Dartmouth College.