Jerome Powell, chairman of the Board of Governors of the Federal Reserve System (“Board” or “FRS”), today finished up his semi-annual tour of Capitol Hill when he presented to the U.S. House Committee on Financial Services the status of the Board’s monetary policy as it impacts the US economy.
I have watched hundreds of Congressional hearings over the past twelve years and quite frankly I never expect very much substance. I would advise that if you can’t read Mr Powell’s entire report, then his written testimony should suffice.
The chairman of the committee, Maxine Waters, Democrat of California, announced early in the hearing that a bill she sponsored, the Federal Reserve Racial and Economic Equity Act (HR2543), had passed the House and is now sitting in the Senate. The intent of the bill is to add additional demographic reporting requirements; to modify the goals of the Federal Reserve System, and for other purposes.”
Specifically, HR2543 would require the FRS to:
- Eliminate disparities across racial and ethnic groups regarding employment, income, wealth, access to credit;
- Conduct monetary policy and bank regulation in order to eliminate the aforementioned disparities;
- Conduct payment system operations in order to eliminate racial and ethnic disparities;
- Continue carrying out the Community Reinvestment Act of 1977; and
- Conduct comparisons across different demographic groups including race, ethnicity, gender, and educational attainment.
I have come to accept Congress’ authority to create a central bank system pursuant to Congress’ responsibility under the U.S. Constitution to regulate the value of money. I can understand a constitutional argument that Congress used an implied or ancillary power to create the FRS. Using the central bank as a social agency for diversity, equity, and inclusion I can’t fully embrace.
The Constitution does not provide for a central bank much less for a central bank that has as part of its mandate the mitigation of harm in the banking system to ethnic minorities. The boat has long left the harbor for any mitigation of banking harms to blacks.
Blacks were not a part of America’s capital and natural resources allocation plan dating back to the 1600s. The exponential increase in capital holdings by whites are an expected result of human behavior and lineage maintenance. Due to slavery and the Jim Crow era, Blacks were doomed to remain behind in the capital holdings race. In order to participate in true banking activity, the entire population of blacks in America for its first 300 years would have to have owned land, waterways, access to minerals, and access to fair labor markets in order to trade for credit.
What Mrs Waters has proposed in her bill is about the best that the black political class can do in Washington. Even if the measure passes in the Senate, the necessary reallocation of capital to blacks would not occur.
HR 2543 serves no other purpose but to rile up Senate Republicans and make them the scape goat for failed policy.
23 June 2022
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