My latest Macro Musings podcast is with Peter Conti-Brown. Peter is a financial historian and legal scholar at the University of Pennsylvania. He is also the author of a new book The Power and Independence of the Federal Reserve and joined me on the show to discuss it.
Our conversation begins with what Peter calls the three foundings of the Fed: 1913, 1935, and 1951. These were the pivotal dates where major changes were made in the legal structure of the Fed. These changes, however, only changed the legal infrastructure to the Fed. Important personalities continued to transform the institution. Peter points specifically to three Fed chairs for making the Fed what it is today: William McChesney Martin, Paul Volker, and Allan Greenspan.
We also cover the important role the staff plays at the Fed. In particular, the discuss the inordinate influence the head of the international finance division and the general counsel play in shaping international and domestic policy. That they have so much power, but are not appointed creates legal issues according to Peter. Similarly, regional bank presidents are FOMC members who set national policy but not appointed by the President. Peter believes a reexamination of how they are appointed is warranted too.
We then discuss some more recent issues such as the debate over whether the Fed was really constrained by law when it came to bailing out Lehman. Peter, a lawyer, provides a discussion of this legal claim made by Fed officials and does not find it convincing.
Finally, we talk about the future of the Fed under President Trump. One question we consider is whether the President can fire a Fed chair. President Truman fired Thomas McCabe and there enough legal ambiguity that it could be done again. But it would be politically costly. We also discuss who would be on the shortlist for the board of governor positions for Donald Trump.
This was a fascinating conversation throughout. You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more shows are coming.
Peter Conti-Brown's home page
Peter Conti-Brown's twitter account