Page 6


SABRINA BERMINGHAM Henry B. Gonzalez on patrol if the central bank had made a “wise or compassionate move, when millions of Americans are in dire straits and nearly seven percent of the labor force is unemployed.” While these recent signs have indicated that the Fed is beginning to get the message that it should be more accountable, Gonzalez has not rested. He sees deeper problems as well. He sees a Fed that “fancies itself as appearing all-powerful and all-knowing. Like the Wizard of Oz, the Fed tries to keep the curtains closed. To do otherwise would be to reveal that the people pulling the monetary policy levels are mere mortals after all.” The Federal Reserve system employs some 730 economists, statisticians, and other researchers. But that does not mean that they do not need to hire outside consultants. The House Banking Committee found that since January 1991, the Fed has spent almost $3 million for 290 outside economic consultants. When Gonzalez asked Nobel Laureate Milton Friedman why the Fed would be spending so much money on outside consultants, he responded that the Fed was, “buying up its most likely critics.” An example of Fed benevolence was evident at the end of February, when in Coconut Grove, Florida, the Atlanta Fed hosted a threeday conference on derivatives. “All of this benevolence,” Gonzalez said, “to academic and influential business people alike,” is the most genteel and effective lobbying tool around. The Fed uses it freely just like any other corporate titan. “Only the Fed wants us to think that it is the independent, nonpolitical, central bank.” The fact that the Fed sometimes seem to behave like private industry is not all that surprising, given its composition. Since its founding in 1913, the Fed has had 87 governors and 110 presidents at the 12 Federal Reserve Banks. Those 197 have included two people of color. As for Federal Reserve Bank presidents, there has been one woman, and no minority appointments. This is something else Gonzalez wants to see changed. Recently there have been two vacancies on the Fed board and it appears that another non-minority male, White House economist Alan Blinder, will fill the spot vacated by David Mullins. Mullins, who served as the Fed’ s vice-chair, moves to the private sector to work with John Meriwether, a former Salomon Brothers officer who left that investment bank in the early 1990s after it was involved in government securities market scandal. While in the past, Gonzalez’ s efforts might have been dismissed as gadfly attempts unlikely to effect policy changes in the inner councils of the central bank, Fed officials are learning that they are no longer immune from Congress. And it’s a lesson they’re being taught by the persistent Chair of the House Banking Committee. THE TEXAS OBSERVER 9