Most importantly, in relation to Fed-banking relations, the Fed is a really good example of the captive regulator. I did two years time in the Philadelphia Fed after college and was continually impressed by the backhanders regularly given to local speculators, some of whom represented Old Banking Money, some cowboy types. Nearly all were exporting mid-Atlantic deposits to various faraway scams. I found myself attributing this phenomenon partly to shared culture, partly to the industry's revolving door for employees, partly to a paternalism that says Fed banks must not fail, partly to competition in laxity with other bank regulators (the Fed was continually worried about losing its member banks to the Comptroller of the Currency and hence turned many a blind eye when the threat arose), partly to not having any contact with Greideresque populism, except as Maggie suggests, to ignore community protesters while redlining continued unabated. After relocating to Southern Africa, when I returned to the US for a visit during the early 1990s and heard Bush blaming tightfisted bank regulators for the long recession I had to laugh. Anyhow if you think Greenspan and his crew are bad, come to Pretoria where SA's Reserve Bank governor has won the Euromoney Banker of the Year award, bailed out an Afrikaans bank on ethnic home-boy grounds, liberalised currency so rich whites and TNCs can export their apartheid takings, encouraged hot money inflows, let the currency crash 25% in a six-week slide in early '96 when the inflows turned outward without a hint of restoring currency controls, raised interest rates to unprecedented levels (13% real prime on average last year, down a wee bit now thanks to higher inflation), and generally twisted ANC economic minds to mush. To top it off he's a leader Broederbonder, ruddy, stout and enjoys taking the punch bowl away well before the party begins, in order to share it with his Boer banking friends. Bank profits have increased handsomely during the eight years he's reigned, at a time SA has had its longest depression ever and has lost over 10% of formal sector employment. No hope for a replacement soon. IMF managing director Camdessus explicitly instructed the ANC to reappoint both the apartheid-era central banker and finance minister, at the time -- five months before the 1994 election -- the IMF granted a $850 million loan. Mandela did so in his inaugural speech, leaving many of us gagging. > Date: Tue, 2 Sep 1997 06:24:38 -0700 (PDT) > Reply-to: [EMAIL PROTECTED] > From: [EMAIL PROTECTED] > Subject: [PEN-L:12088] Re: Greenspan ... > In a message dated 97-09-01 15:38:23 EDT, Jim Devine writes: > > >t's not true that banks don't pay for the services of the Fed. They have to > >hold reserves, which don't pay interest, which the bankers (at least) think > >of as a tax; they also have to live up to the Fed's large number of rules. > >But it's unclear whether or not the bankers get benefits exceeding such > >costs (I've never seen research on this question). I would guess yes, since > >bankers hardly ever complain about the Fed. > Yeah, but the piddly amount they hold on to (generally less than 2%) in > relation to the huge amount they loan out at exhorbitant rates is but a mere > drop in the bucket. Also, in general, the Fed's large number of rules > benefit banks to the detriment of others--all these decreases in the barriers > to interstate banking have increased the profitabilty of the megabanks like > Chase/Chemical and Shitty, oops, Citibank at the expense of community > economic interests like small business loans, home owner loans in 'marginal' > neighborhoods. > > maggie coleman [EMAIL PROTECTED] > >
