Submitted by Peter Conti-Brown via The Yale Journal on Regulation,
Given the tumult of the opening weeks of the Trump Administration, the public is forgiven for not realizing that the Administration is woefully understaffed. But even in the flurry of personnel announcements from first the transition team and now the Administration, on the Federal Reserve – perhaps the most powerful of governmental agencies – we have had near radio silence. Of course, Fed Chair Janet Yellen is still at the helm and will be for another year. But two long-standing vacancies are available for the President immediately, and in them lies a key to understanding a fundamental relationship that should guide how we think about the Trump presidency and the very nature of financial and monetary system. While we have already heard from the President that wrestling magnate Linda McMahon has been nominated to lead the Small Business Administration and billionaire Wilbur Ross will lead the Department of Commerce, we have only some hints about whom might fill those important vacancies.
Why the lack of movement on the Fed? Faced with similar vacancies, then President-elect Obama moved relatively quickly. Daniel Tarullo was announced in the first group of regulatory appointments, in December 2008. Granted, that was during a financial crisis: President-elect Obama may have felt early enthusiasm for filling those vacancies that President Obama didn’t share. Obama has kept vacancies at the Fed’s Board longer than in any other time in history, including when Democrats controlled the Senate. It’s possible that President Trump will treat Fed vacancies with a similar disregard.
Possible, but I wouldn’t count on it. President Trump is likely to assert himself early in influencing the Fed, as is his right. But Fed defenders and critics should also take careful note: how he uses that authority will tell us much about whether the central bank will continue in its present form as a policy-making body steeped in traditions of expertise and independence, or whether it will become another arm for partisan and political warfare.
This post was published at Zero Hedge on Feb 11, 2017.