Courtesy of Tim Iacono at The Mess That Greenspan Made
You have to give Nobel Prize winning economist Joseph Stiglitz credit for his candor in some remarks he made yesterday at a conference where financial market reform was discussed.
As recounted in this story over at the Huffington Post, he said a few things that should be patently obvious to anyone with a working knowledge of how the Federal Reserve system really works, yet, even to me they somehow seemed shocking.
"If we had seen a governance structure that corresponds to our Federal Reserve system,we would have been yelling and screaming and saying that country does not deserve any assistance, this is a corrupt governing structure," Stiglitz said during a conference on financial reform in New York. "It’s time for us to reflect on our own structure today, and to say there are parts that can be improved."
To Stiglitz, the core issue is that regional Fed banks, such as the New York Fed, have clear conflicts of interest — a result of the banks being partly governed by a board of directors that includes officers of the very banks they’re supposed to be overseeing.
What’s even more egregious is to think that, not only does the Federal Reserve supervise the very banks whose CEOs sit on its board, but that, even after their disastrous track record as a consumer watchdog over the last decade or so, that power appears likely to stay with the central bank despite loud protestations from those with no lobbying clout.
Clearly, the system can not be reformed from within – that much should be clear by now.