Fed To Geithner: Go Pound Sand

Aww, poor Timmy the tax cheat.

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, three people familiar with the matter said.

The Obama administration proposed on June 17 a financial- regulatory overhaul including a “comprehensive review” of the Fed’s “ability to accomplish its existing and proposed functions” and the role of its regional banks. The Fed was to lead the study and enlist the Treasury and “a wide range of external experts.”

Some top central bank officials, after agreeing to the review, saw a potential threat to Fed independence after the Treasury released the proposal, two of the people said. The Obama plan said the Treasury would consider recommendations from the review and “propose any changes to the Fed’s governance and structure.”

“It is not obvious at all why that is a Treasury responsibility or even appropriate why the Treasury would undertake that kind of study,” said Robert Eisenbeis, chief monetary economist at Cumberland Advisors Inc. in Vineland, New Jersey, and a former Atlanta Fed research director. “The Fed was created by Congress and it is not part of the executive branch.”

The Treasury has no business sticking their nose in the Fed's business. And the executive branch needs to mind their own business and stay away from monetary policy and the Fed. I would be just as adamant if the shoe were on the other foot and the Fed was trying to tell the Treasury what to do.

Believe me, folks, the last thing you want is for the politicians to be able to directly influence monetary policy, regardless of which party is in charge.