(ZH) — While the concept of 'independence' among the unelected central bank cognoscenti is as cute as the tooth fairy or santa claus, it is nevertheless defended by those on high as sacrosanct to our very democracy. That is until The Wall Street Journal's editorial board finally had enough of Fed officials joining the 'resistance' against financial reform…
Janet Yellen didn't run for President, but you wouldn't know it from her policy démarche Friday at the Federal Reserve's annual Jackson Hole retreat. The Fed Chair unleashed a defense of post-crisis financial regulation that shows how political the world's central bankers have become.
"Already, for some, memories of this experience may be fading—memories of just how costly the financial crisis was and of why certain steps were taken in response," Ms. Yellen said.
She added that regulatory changes "should be modest" and retain the superstructure built under Dodd-Frank.
Ms. Yellen's comments followed a blunter recent warning from Fed Vice Chair Stanley Fischer, who told the Financial Times that "one can understand the political dynamics of this thing, but one cannot understand why grown, intelligent people" would "reach the conclusion that" you should "get rid of all the things you have put in place in the last 10 years." Thank you, Senator Warren, er, Fischer.
This is extraordinary. Fed officials are launching a political campaign to retain their vast discretionary control over the American financial system. The brazenness of the effort shows how far afield central bankers have roamed from their traditional remit of monetary policy, which Ms. Yellen barely mentioned. You'd think she'd focus on that duty given that the Fed faces a watershed as soon as next month as it decides whether to begin rolling back the $4.5 trillion balance sheet it has amassed since the 2008 financial panic.