Seems that the financial “reform” bill that is winding is way through the Senate to a swift death is being held hostage to the whims of Senator Bob Corker, who wishes that the Consumer Financial Protection Agency become an autonomous agency within the Federal Reserve system.
This is asinine. To the extent that we need a CFPA, it should definitely not be part of the Federal Reserve. It is already bad enough that we have a Congress that regularly gives the Fed all kinds of discretionary wiggle room under the banner of their “dual-mandate”; giving the Fed a responsibility for consumer regulation makes the entire institution much more vulnerable to the populist whims of Congressional leaders…and especially Democrats.
The entire institution called the Federal Reserve System needs to be re-drafted as a contractual body, mandated to set an explicit target for growth in some (one!) nominal variable (NGDP?), and to do everything its power to keep that nominal variable growing on target in the long run. If they fail to do so (like they’ve done at least twice in the last century, they’ve breached contract and thus the people running the show need to be replaced with people who will honor this contract. Plain, simple, black, and white. No room for fancy interpretation of the goals.
If the CFPA ends up at the Federal Reserve, I urge all leftist-liberals, and everyone else, not to support this bill. Paul Krugman is already on board ;].