The Payoffs Continue

The Federal Reserve Bank of New York announced Monday that a New York labor boss, Denis Hughes, has been named to head the bank's board of directors. 

This is big news because among the 12 Federal Reserve banks, the New York Fed is the greatest among equals.

As John Hilsenrath blogged in yesterday's Wall Street Journal, the chairmen of the 12 Fed District Banks are supposed to have experience in banking--but not be bankers, according to the 1913 law that created the Federal Reserve System. That's a challenge. Typically the role is filled by an ex-banker or an academic with economic experience.

Fed boards are supposed to reflect the banking and community interests of their Districts. But this isn't about reflecting the community's interest. This is about reflecting the interest of Big Labor.

Big Labor put Barack Obama in the White House. The payoffs that began with a sweetheart deal for Labor on the Chrysler bailout and effective control of General Motors, continue with this little plum job.

I'm all for Fed banks reflecting the composition of their districts. But only one quarter of New Yorkers belong to labor unions. There certainly have to be more--say housewives--in New York. How about a housewife as chairman of the New York Fed?

More than two million New Yorkers receive food stamps. Why not try a food stamp recipient as New York Fed chairman?

I don't know about you, but when I go to the doctor, I'm comforted to see all of her diplomas and certificates framed on the wall. If I were in the examination room and the plumber had just finished fixing the sink, I'd be less comforted if he offered to fix my leaky heart valve while he was at it. 

Call me crazy, but I think banks should be headed up by--well, bankers. Especially the most important branch of the most important central bank in the world.

The Obama cadre can shore up its Hispanic base with a Supreme Court nomination, or preempt a rival by offering her the top State Department portfolio, but when it comes to our monetary system, let's not play politics. 

Just thought you might like to know.