"The Federal Reserve Board has rejected a request by U.S. Treasury Secretary Timothy Geithner for a public review of the central bank's structure and governance," Bloomberg News reports in an article that quotes a defender of the Fed's decision as saying "The Fed was created by Congress and it is not part of the executive branch." In fact, Mr. Geithner's boss, the president, appoints the chairman of the Federal Reserve, and had Mr. Geithner considered the review of the Fed a high priority he might have tried to prevail upon President Obama to make Chairman Bernanke's submission to such a review a condition of his reappointment. That opportunity was apparently missed. Some see the Fed's independence as a strength, insulating decisions on monetary policy from political meddling. Others see it as a weakness, allowing important economic policy decisions to be make by unelected, unaccountable bureaucrats. Mr. Geithner has been an advocate of giving the Fed more power to regulate companies that are systemically important; the Fed doesn't seem particularly grateful, or if it is, it sure has a strange way of showing it.
One reason this is in the news now is because of a deadline. The "new foundation" for financial regulation that Mr. Obama rolled out in June included an October 1 date: "The Federal Reserve, in consultation with Treasury and external experts, should propose recommendations by October 1, 2009 to better align its structure and governance with its authorities and responsibilities." FutureOfCapitalism.com said at the time that "Those recommendations will be worth keeping an eye on." Now, reports Bloomberg, "While the report requested by the Treasury hasn't been formally scrapped, no work has been done on the project, which was due Oct. 1,"