U.S. PIRG Consumer Blog: HuffPo: Re Sen. Shelby on democratizing the Fed

Over at Huffington Post, Ryan Grim has a nice post, Reorganize The Fed, explaining how the Federal Reserve's governance is anti-democratic. While the 7 Federal Reserve governors are in fact selected by the President and consented by the Senate, the regional Federal Reserve Banks are dominated by bank-selected directors and the Presidents of the regional fed banks -- chosen by those bankers -- actually rotate onto the Fed's Open Market Committee, which sets monetary policy for the country. As Grim explains, Senator Richard Shelby, ranking Republican on Senate Banking, is concerned:

"It's basically a case where the banks are choosing or having a big voice in choosing their regulator. It's unheard of. That is not widely known to the American people. It will be." It's the kind of situation, Shelby said, that doesn't withstand public scrutiny. "It's something I'm very interested in changing, and I think the more it is illuminated, when people see what it is, they will see because it goes right back to the failure of the Federal Reserve to be a first-class regulator, and the role they played in the debacle," he said.

We agree with Senator Shelby,as does the U.S. PIRG-backed Americans For Financial Reform.