Just home folks on Federal Reserve boards By Jim Hightower Washington, D.C. There’s an old saying among Texas farmers: “If you can get a loan down at the bank, you don’t need it.” That’s about as gentle as farmers, small businesspeople, and average families get when they talk about their experiences with the tight money policies of the American banking system. For most of us, bank loans come dearly, if at all. Hightower, founder and former director of the Agribusiness Accountability Project in Washington, D.C., will soon be joining the Observer’s editorial staff. On the other hand, not only do rich people and giant corporations easily get loans, they can get big ones at what the bankers call “premium” or “preferred” rates. It is an unfair system and one reason that the rich get richer. Everyone knows it happens, but why? In a recently issued report that is rare for its candor and detail, the U.S. House of Representatives gives us a clue: the 269 Federal Reserve bank directors who govern the nation’s banking system and shape U.S. monetary policy come almost exclusively from giant corporations and banks, despite legal requirements that a much broader public be represented on these boards. There are 12 Federal Reserve district directors so that a total of 108 directors are appointed to their boards. In addition, there are 25 branches of the district banks \(including branches in Houston, San Antonio, and law, these 269 people are supposed to be representative of us all, not just an economic elite. But the truth is, none of “us” sit on the boards. In his foreword to the report, House states that “consumer and labor organizations have no apparent representation anywhere in the system.” They are not the only ones left out, as Reuss notes: “Small farmers are absent. Small business is barely visible. No women appear on the district boards and only six among the branches. Systemwideincluding district and branch boardsonly 13 members from minority groups appear.” Bluntly put, a big business bunch sits on these boards handling the public’s banking affairs. The House staff report concludes that “in many areas, the list of Federal Reserve directors reads like a blue-ribbon list of ‘Who’s Who in American Corporations.’ ” The Texas district is no exception. Three classes of directors serve on the boards of district banks, such as the one at Dallas. Class A directors are bankers, which needs no commentary here. Class B directors are “borrowers.” At the Dallas bank, we borrowers are represented by Stewart Orton, president of Foley’s department stores of Houston, a division of Federated Department Stores with $100 milton developer who built the Galleria and who pulls down $35 million annually in rent; the Gaines Cattle Company in Amarillo, which has 170,000 head capacity in its feedlots and which grosses about $50 million annually. Not many Texas borrowerssmall businesses, students, family farmers, home buyers, consumerswill feel much kinship to Orton, Hines, and Herrick, nor take much comfort in knowing that they are represented by such an elite trio. The last hope of average Texans for fair representation rests with the Class C directors, who are intended to embody the “public” interest. But, again, it is a mighty thin slice of the Texas public that is brought aboard, since the three public directors of chairman of the board of Dresser Industries, the fifth largest corporation in Texas with more than $2 billion a year in sales; Irving A. Mathews, chairman of Frost Brothers department store in San Antonio, which makes $19 million a year in sales, a division of Manhattan Industries; and Charles T. Beaird, chairman of the board of the Beaird-Poulan electronics firm, which makes $32 million in sales, a division of Emerson Electric Co. September 17, 1976 5
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