Caroline Baum: Greenspan, `Master of Garblements’

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Caroline Baum, one of the best financial reporters out there, has a new column today about the Fed. I recommend it highly. The article is about a new book by Robert Auerbach, Professor at the University of Texas, Austin called “Deception and Abuse at the Fed.”

None of the Fed chairmen chronicled in the book come across well. Alan Greenspan fares especially poorly. Auerbach also demonstrates that the Fed is very much conflicted as the U.S. bank regulator, and, therefore, dissembles and evades the truth.

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“Auerbach sees a clear conflict of interest in the Fed’s role as bank regulator. He should know. While at the Banking Committee, he says he helped uncover how the Fed used banks to lobby against legislation it didn’t like, claiming new laws would curb its independence — “the all-purpose banner that could be waved to shield Fed officials from accountability,” he says.

Some of the conflict was baked into the Fed cake from the beginning. Commercial bankers elect two-thirds of the directors at the Fed banks, as required by the Federal Reserve Act of 1913. The upshot?

“The Fed is regulating the very people charged with regulating it,” Auerbach writes.”
Caroline Baum, Bloomberg News, 5 Jun 2008

This looks like an interesting book that I will definitely look to buy. See a link to Caroline’s column on my blogroll.

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News Round-Up: 05 May 2008

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