Asserts the retired finance professor and conservative in Tennessee: "However, regardless of what [Ben] Bernanke decides [regarding his future when his term as chairman expires in 2014, a President Romney would be left with a Federal Reserve Board comprised of governors all appointed by President Obama. Even though the chairman gets the majority of the publicity, all the governors sit on the Open Market Committee that makes the decisions regarding monetary policy. This Board of Governors has been unanimous in its support of Bernanke in keeping long term interest rates artificially low. Thus, a Romney appointed chairman may encounter a recalcitrant group of fellow governors and find it difficult to reach a consensus if a change in policy were desired."
He argues that Fed policy is often contradictory: "By manipulating the interest it pays on reserves it can induce the banks not to lend. However, by paying interest on reserves, the Fed is acting counter to its own stated policy - that of stimulating economic growth. Indeed, if you take out the increase in the government sector, overall economic growth during the Obama years has been negative. Coupled with the Fed seemingly driving the economy with its foot on both the accelerator and the brake are the actions of the Fed, the FDIC and the Comptroller of the Currency as bank regulators. All are still smarting over being accused of lax regulatory oversight precipitating the financial crisis. As a result all are now being heavy handed resulting in a tightening of loan standards drying up funding to businesses and individuals."
Harold A. Black: "The Federal Reserve Needs New Leadership"
