Senate Brushes Aside Vitter's Filibuster Of Federal Reserve Board Nominees

The good old days, when Vitter & his GOP cronies LOVED the Fed

On May 9th, my sister's birthday (which I forgot), we looked at how deranged Confederate obstructionist David Vitter was doing his bit to undermine the United States by filibustering-- randomly-- President Obama's bipartisan nominees for the Federal Reserve Board. Thursday I was out to dinner with two friends at Gattopardo who happen to be friends with Harvard economist Jeremy Stein and they informed me that the Senate had just overcome Vitter's filibuster-- on Stein and fellow nominee Jerome Powell. 24 rabid right obstructionists voted against confirming Stein and 21 voted against confirming Powell. Blunt, Boozman, McCain and Portman voted against Stein but gave up on opposing Powell. [Vermont Independent Bernie Sander voted against Powell, a slimy Republican investment banker who Obama agreed to as part of his unattractive compromising nature.] Like Matt Yglesias, I think it's more than obvious that Vitter and other Confederate obstructionists are blatantly trying to crush the U.S. economy for their own political gain. Vitter, wrote Yglesias, "likes the jobless rate right where it is or perhaps wishes it were even higher. By adopting less 'activist' policies, the Fed could push nominal spending levels even further below trend than they currently are. And with nominal spending lower, more people would lose their jobs. With more people unemployed, there'd be fewer people commuting to work and fewer people renting apartments. The key housing and energy segments of the Consumer Price Index would fall and Vitter and other monetary hawks could declare mission accomplished on price stability. Ethically and economically, I think that would be a disaster, but to Vitter's credit he's being admirably clear about what his beef with Jeremy Stein and Jerome Powell is. There's no trumped-up charges here and no nonsense. Vitter believes that adding Stein and Powell to the Fed Board would increase aggregate demand, and he doesn't want to see that happen. In the modern day U.S. Senate, a handful of senators with strong feelings about an issue can basically block an appointee and Vitter has strong feelings about the desirability of a lower level of demand."

The seven member board is back to full strength for the first time since 2006. As the NY Times explained, "For months, Senator David Vitter, a Louisiana Republican and a member of the Banking Committee, held up the nominations, saying the two men would be “rubber stamps” for the policies of the Fed chairman, Ben S. Bernanke, and, by implication, the Obama administration. Mr. Bernanke has already done more to increase economic growth and reduce unemployment than many of his conservative critics favor, while other critics-- predominantly liberal-- argue that he has not done enough."

Apparently the shenanigans at JPMorgan Chase this week scared enough Republican senators into stopping the game playing with the Fed. The risk to their political careers suddenly came into view.

After JPMorgan Chase’s recently acknowledged trading losses, which raised questions about whether the Fed and other agencies had a tight enough hand on the regulatory reins, Senate Democratic leaders found enough votes to surmount objections from Mr. Vitter and others. Senator Harry Reid, the majority leader, explicitly linked the vote to the JPMorgan Chase matter, saying the bank had been behaving as if its business were a game of craps.

In addition to setting interest rates based on the economy’s condition, the Fed also is one of the main regulators of financial businesses.

Both of the new governors are experienced in financial regulation, Mr. Powell as a senior Treasury Department official under President George H. W. Bush, and Mr. Stein as an adviser to Treasury Secretary Timothy F. Geithner.

Some Fed watchers have expressed concern that the institution has been operating below full capacity for so long. Mr. Obama had been slow to fill all of the vacancies, and Republicans had blocked some of his nominees.

...On the regulatory front, Mr. Vitter said, approving the two new members would make it easier for the board to enact rules carrying out the Dodd-Frank financial regulation law and pushing “those regulations to the left, if you will.”

The two nominees were confirmed by a voice vote of the Senate Banking Committee on March 29, and neither is controversial in his own right. But Senate Republicans have blocked many of Mr. Obama’s nominees, out of a broader opposition to his policies.