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|Subject: Trump’s Push to Meddle With the Fed Is Part of a Global Trend Fri Feb 17, 2017 12:42 am|| |
|President Trump has asked his financial regulators to subject their financial regulations to “more rigorous regulatory impact analysis” and to “restore public accountability within federal financial regulatory agencies” in one of his executive orders.|
That sounds pretty unobjectionable. But for the Federal Reserve, the most important American financial regulator, the traditional response would have been: Leave us alone.
The Fed, the nation’s central bank, has long prized its independence. It has thought that it should decide for itself the best way to regulate American financial institutions, unfettered by unsophisticated, and potentially venal, political oversight.
But political leaders around the world are not at all shy about interfering with what the central banks do.
Mr. Trump’s executive order reflects a global mood. Politicians in Britain and elsewhere in Europe have also started to publicly lament the conduct of their central banks.
During her testimony to Congress this week, Janet Yellen, the Fed chairwoman, was criticized for both the Fed’s monetary policy and its regulation of banks.
Representative Andy Barr, Republican of Kentucky, suggested that the slow growth in the wake of the Fed’s quantitative easing program underscored “the failure of unconventional policies to deliver the expected results.” Other legislators chimed in with similar criticism.
Legislators also blamed the Fed for the sort of overregulation that the president’s executive order is designed to address. The House Financial Services Committee chairman, Jeb Hensarling of Texas, criticized “a failed regulatory state” for impeding growth, with the implication being that the Fed was part of the problem.
Senator Pat Toomey, Republican of Pennsylvania, argued that the Fed was incorrectly concluding that the “prospect for growth is not at all changed by the prospect of tax reform and regulatory reform.”
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