Posted: 3:43 am
August 14, 2008
SOMEONE turned down the volume at the Federal Reserve - finally.
It could just be summer vacations or maybe an intentional change in policy, but the governors of the Fed, as well as the presidents of the Federal Reserve's regional banks, have finally shut up.
Very few comments ever came from the underlings of former Fed Chairman Alan Greenspan. And when someone did say something, it was vanilla in flavor and fresh as a loaf of week-old bread.
Not so with current Chairman Ben Bernanke, who, if not exactly encouraging differences of opinion, has been willing to tolerate public dissent from everyone at the central bank.
"Bernanke came in with a collegial, let's-be-friends attitude with the [Fed] governors," said Chris Whalen, a long time Fed watcher. "It's very different from Greenspan."
Fed Vice Chairman Donald Kohn has had a lot of opinions lately. Governor Fred Mishkin also has had a big mouth, considering he is just one of five equally influential Fed governors.
Among the Fed bank presidents, New York's Tim Geithner has been a chatterbox, Charles Plosser in Philadelphia has been a big mouth and Jeff Lacker in Richmond won't shut up.
But the biggest yap of them all has been Richard Fisher, who not only has a lot to say but also has been a regular dissenter in decisions on interest rates when he votes.
While we all cherish freedom of speech in this country, it's not necessarily a good thing when it comes from the Fed.
"I believe transparency should be limited," said famed economist Henry Kaufman of the free-speech movement under Bernanke. "The markets respond far better to uncertainty than certainty. Uncertainty discourages risk taking."
So is this the kind of a hush - with apologies to The Carpenters - that is a new policy at the Fed? Or are members of the Central Bank just tired of hearing themselves talk?
We'll probably never know, but sure we can guess.
"I think everyone is worried," said Walker Todd, former counsel and research officer of the Federal Reserve Bank of Cleveland who now works at the American Institute of Economic Research.
