Trying to make central bankers accountable for their actions: US edition

From CNBC :

Sen. Elizabeth Warren, a Massachusetts Democrat who has been a staunch banking critic, particularly on issues relating to the Wells Fargo fake account scandal, said she wants a chance to grill Williams before he is appointed. “Mr. Williams’ track record raises several questions, including about his fitness to supervise Wall Street banks given the San Francisco Fed’s inadequate supervision of Wells Fargo during its many consumer scandals,” Warren said in a statement. “If Mr. Williams is selected, the Fed’s Board of Governors should not approve his selection until Mr. Williams and the co-chairs of the New York Fed’s search committee testify before the Senate Banking Committee about his qualifications and the process that led to his selection.”

The San Francisco Fed has been tarred with the fallout from the Wells Fargo problems. Also, Washington Mutual, which was in the San Francisco jurisdiction, was one of the highest-profile bank collapses during the financial crisis, and much of the savings and loan crisis of the late 1980s revolved around the region.

While it would be hard to place the blame for any of those failures directly at Williams’ feet, his appointment still brings up reminders of a darker place in American banking historyWells Fargo employees, pressured by aggressive sales quotas that have since been abandoned, created some 3.5 million accounts without customer knowledge. Several high-ranking bank officials were pushed out, as were multiple board members.

“I do know the San Francisco Fed, which gave us Janet Yellen as well, has perhaps overly focused on the monetary and economic functions of the Fed and completely ignored or failed to understand the regulatory functions,” said Dick Bove, analyst at the Vertical Group. “So they have given the United States some of the worst financial disasters in history.”

The emphasized last lines just sum up. Central banks have ignored the basic regulation function all this while and preferred to get lost in the jazz world of monetary policy.

One might say this is a case of too little too late. But atleast they are trying. Making central bankers accountable for their decisions or lack of them is the least talked about aspect of central banking. The academia has barely discussed these issues and always focusing on giving the already highly independent central banks more independent. Given how banking messes have become so entrenched across the world, one is wondering what is going on.


One Response to “Trying to make central bankers accountable for their actions: US edition”

  1. Ellie Magdefrau Says:

    Trying to make central bankers accountable for their actions: US edition | Mostly Economics

    […]What kind of workplace conditions does this remind you of?[…]

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