The Institutions of Federal Reserve Independence Peter Conti-Brown

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193 Edward W. Kelley, Jr., served between 1987 and 2001; J.L. Robertson served from 1952 to 1973. Id. Note, too, that M.S. Szymczak served from 1933 to 1961, the longest serving member of the Board. His appointment is not included in this analysis, because he was appointed to the Federal Reserve Board, and thus not subject to exactly the same appointment procedure.

194 12 U.S.C. § 242. Emphasis added.

195 Source: Membership, supra note 191. Presidential Administrations calculated to the month, with President Obama’s administration ending in May 2012 (the date of his most recent Board appointment). Roosevelt’s Presidency is dated from the signing of the Banking Act of 1935. Governors who filled partial terms and were then reappointed, where another nominee might have taken her place, are treated as two appointments.

196 12 U.S.C. § 242.

197 Id.

198 This does not mean that the Fed will always get his first choice for those slots. President Obama nominated Peter Diamond for an open spot on the Board, but Diamond was deemed unqualified by Republicans opposed to the nomination. Diamond won the Nobel Prize while his nomination was pending. See Peter A. Diamond, When a Nobel Prize Isn’t Enough, NY Times, June 5, 2011.

199 See Bernhard, supra note 49; Lastra, Banking Regulation supra note 6; Miller, supra note 6.

200 Chair Burns’s diaries are filled with his differing loyalties between the Treasury Secretaries and President Nixon. See, e.g., Burns, supra note 180 at 32 (ed. 2010).

201 For a detailed history of this period, see Meltzer, History of the Federal Reserve, volume 2 bk 1at 579-725. See also Kettl, supra note 2; Clifford, supra note 100. For a briefer treatment, see Robert L. Hertzel and Ralph F. Leach, The Treasury-Fed Accord: A New Narrative Account, 87 Fed. Res. Bank of Richmond Ec. Q. 33 (2001).

202 37 Fed. Res. Bull. 267 (1951). For a fuller contemporaneous discussion of the Accord, see the Fed’s Annual Report of 1951, 98-101.

203 Monetary Policy and the Management of the Public Debt: Hearings Before the Subcommittee on General Credit Control and Debt Management of the Joint Committee on the Economist Report, Congress of the United States 82nd Congress, Second Session, Pursuant to Section 5(A) of Public Law 304, at 37.

204 Clifford, supra note 209 at 253-255.

205 See Rich Miller, Jeff Kearns & Ian Katz, Lew-for-Geithner Switch Ends Era of Tight Fed-Treasury Ties, Bloomberg, Jan. 10, 2013.

206 See text accompanying notes 76-81, supra.

207 For more on these issues, see Conti-Brown, supra note 47.

208 See Barkow, supra note 77.

209 Address at the mid-winter meeting of the New York State Bankers Association, January 25, 1954, quoted in Jerome A. Clifford, Independence of the Federal Reserve System 32 (1965).

210 I choose the term carefully. Although frequently indulged, the temptation to refer to the first and second Banks of the United States as “central banks” is to engage in a kind of prochronism that is without defensible intellectual basis.

211 Clay is an interesting character in these debates–like James Madison and many other Jeffersonian Democrats politically active long enough to debate both the First and Second Banks of the United States, Clay was initially opposed to central banks, and eventually in favor. See Robert V. Remini, Henry Clay: Statesman for the Union 40, 139 (1993).

212 2 Albert S. Bolles, The Financial History of the United States, from 1789 to 1860, at 32 (4th ed.1894).

213 Art Wilmarth appears to be the only exception. See Arthur E. Wilmarth, Jr., The Financial Services Industry’s Misguided Quest to Undermine the Consumer Financial Protection Bureau, 31 Review. Banking & Fin. L. 881, 941-944 (2012). Hockett & Omarova, supra note 6, address some of the New York Fed’s trading features, but not its institutional relationships with the rest of government.

214 12 U.S.C. § 301.

215 12 U.S.C. § 302.

216 12 U.S.C. § 304.

217 12 U.S.C. § 302.

218 12 U.S.C. § 341.

219 12 U.S.C. § 341 (2009).

220 12 U.S.C. § 341.

221 12 U.S.C. § 305.

222 12 U.S.C. § 242.

223 56 Stat. 647 (July 7, 1942).

224 Id.

225 12 U.S.C. § 263(a).

226 Interestingly, though, a close reading of the statute suggests that the influence of the Reserve Banks can be severely restricted by the exercise of this rulemaking authority. The statute also provides that “[i]n such elections”—again, unclear as to the antecedent—“each board of directors shall have one vote.” Id. That restriction does not attach to the seven Governors. The FOMC could conceivably change its rules such that the Governors are each given two or three or ten votes to the Reserve Bank Presidents’ single votes.

227 See Lawrence G. Baxter, Capture Nuances in Financial Regulation, 47 Wake Forest L. Rev. 537, 549-551 (2012) (collecting news sources of criticisms of Jamie Dimon’s position on the board of directors of the Federal Reserve Bank of New York).

228 Carpenter, Detecting and Measuring Capture 3-4.

229 Id. at 2.

230 For specific work on the capture at the Fed, see Simon Johnson, The Quiet Coup, The Atlantic, May 2009, http://; James Kwak, Cultural Capture and the Financial Crisis, in Preventing Capture: Special Interest Influence and How to Limit It (Daniel Carpenter & David Moss eds., forthcoming 2013). See also David Freeman Engstrom, Corralling Capture, 36 Harv. J. L. Pub. Pol’y 31 (2013).

231 For the last, see Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak, and Todd Mitton, The Value of Connections in Turbulent Times: Evidence from the United States, available at (measuring the value to firms affiliated, through the New York Fed and through common nonprofit board memberships, with New York Fed President and Treasury Secretary designee Tim Geithner.).

232 See Eccles, supra note 55 at 60-75 for an illustrative example of this version of the Federal Reserve Banks.

233 See Irwin, supra note 131 at 192-197 for the full account of the Reserve Banks’ lobbying effort, including via the deployment of the member banks. See also Robert Kaiser, Act of Congress: How America’s Essential Institution Works, and How It Doesn’t 306 (2013).

234 Id.

235 Id.

236 Id.

237 Kaiser, supra note 233 at 304.

238 See notes 96-115, infra, and accompanying text.

239 Address at the Eighteenth Annual Convention of the Independent Bankers Association, Minneapolis, Minnesota, May 19, 1952, cited in Clifford, supra note 100 at 22-23.

240 Stiglitz Against Central Bank Independence, Times of India, Jan 4, 2013, available at

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