Courtesy of Pam Martens.
Janet Yellen Testifying Before the Senate Banking Committee on July 15, 2014
America’s central bank, the Federal Reserve, has a credibility problem and a management crisis unique to its unusual structure. If the Chair of the Federal Reserve Board of Governors, Janet Yellen, had any real management powers, she would have immediately asked William Dudley, President of the New York Fed, to step down after internal tape recordings revealed that his staff rubber stamps “legal but shady” deals at the big Wall Street banks it supervises. “Legal but shady” and patently illegal dressed up as just shady deals collapsed this Nation’s financial system only six years ago and continues to depress the country’s economic growth.
The tapes were released by former New York Fed bank examiner, Carmen Segarra, via the public interest web site ProPublica and public radio’s “This American Life.” Segarra is suing the New York Fed, charging that she was terminated when she refused to change her negative examination of Goldman Sachs – a position given substantive credibility with the release of the tapes.
Yellen’s credibility as the head of America’s central bank is undermined by these disclosures because many Americans believe that “the Fed” is the New York Fed because of its gold vault, historic building and decades of guided tours. But the New York Fed is just one of 12 regional Federal Reserve banks over which the Federal Reserve Board of Governors in Washington D.C., chaired by Yellen, oversees in what must be considered a titular capacity.
Yellen can’t fire Dudley or any other Fed Bank President because each regional Fed bank has its own Board that selects its President. The Federal Reserve Board of Governors in Washington, D.C. is given the ability to “approve” the appointment.
According to the New York Fed’s web site, a “principal responsibility of each Reserve Bank board is to select a Bank president who, in its judgment, will be qualified to participate in the monetary policy deliberations and decisions of the Federal Open Market Committee.”
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