Contact us
CALL US NOW 1-888-GOLD-160

Yellen Dodges Questions on Interest Rates and Political Motives

  by    0   0

On Wednesday, Federal Reserve Chairwoman Janet Yellen testified before the House Financial Services Committee on financial regulation. The Fed Chair took criticism from both sides, with Democrats and Republicans criticizing the regulatory body for doing too much and for doing too little. Among the topics was the over-reach of Dodd-Frank, breaking up “too big to fail” firms, and the recent Wells Fargo phony account scandal. However, one important topic side stepped was the impact of low interest rates on any of the problems brought up at the hearing.

Janet Yellen testifies to Congress

The need for more bank regulation was championed by many Democratic representatives on the committee. Rep Stephen Lynch (D-Massachusetts) seemed to sum up the pro-regulation side of the argument, telling Yellen she should take a no-holds barred approach to banks like Wells Fargo. “Go after them. I’d like to see someone held accountable for that. Make their life hell,” Lynch said.

A few members speculated on what motivated Wells Fargo employees and mangers; however, their assumption was simply greed, and the panacea was more regulation. No one took the more realistic position that banks were struggling not only with Dodd-Frank regulations, but with low revenues from artificially reduced interest rates, which, itself, is a form of regulation of the financial markets.

Keeping interest rates low is resulting in less bank revenue while the cost of meeting regulations is being passed on to firms. Both are helping create a stressful atmosphere within struggling institutions to grow revenue at any cost, even to the point of creating phony accounts of their own customers.

The Wells Fargo discussion came just after the bank was fined $185 million for the scandal while Chief Executive John Stumpf forfeited $45 million in compensation and stock options.

Rep Scott Garrett, (R-New Jersey) questioned the Fed’s political motives when making monetary policy, stating “Less and less people believe that the Fed is unbiased.” Garrett questioned whether Fed members like Lael Brainard hadn’t already shown conflict of interests by donating to Hillary Clinton’s campaign. The New Jersey Representative fired away at Yellen asking, “Has Governor Brainard recused herself?” and “Have you ever asked Governor Brainard to recuse herself?”

When asked if a Federal Reserve Governor should be able to donate to a political campaign, Yellen answered she would “need to check with her council” on the answer.

Yellen smartly evades questions of propriety and conflicts of interest for a simple reason: she knows they exist. What also exists is the fallout from a failed monetary policy and over-regulation that’s driven financial institutions to desperate measures.

Get Peter Schiff’s latest gold market analysis – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

Chinese Gold Demand Continues to Strengthen

Gold demand in China was up in September, as the country approaches a peak gold-buying season. Both gold withdrawals from the Shanghai Gold Exchange (SGE) in September and gold imports in August were up, a sign that the Chinese gold market continues to recover after it was hit hard by the coronavirus pandemic.


JP Morgan Chase CEO Worried About Higher Than Expected Inflation

With CPI data once again coming in hotter than expected, it’s getting harder and harder for the mainstream to swallow the “transitory inflation” narrative. And some people are starting to worry. During an earnings call, JPMorgan Chase CEO Jamie Dimon expressed concerns about higher than expected and persistent inflation ahead.


American Consumers Continue to Run up Credit Card Debt

Consumer borrowing has slowed somewhat from the record level we saw in June, but Americans continue to pile on the debt. Consumer debt grew by $14.4 billion in August to $4.35 trillion, according to the latest data from the Federal Reserve. That represents a 4% increase. This follows on the heels of a 4.8% increase in […]


Demand for Silver in Electronics Sector Projected to Surge

The demand for silver is expected to expand along with the continued growth in global connectivity. According to a report released by the Silver Institute, silver demand in electronics and electrical applications is projected to rise by 10% by 2025.


Inflation Bites! Rising Prices Are Eating Up Personal Income Gains

Inflation bites! Personal income rose again in August, but once again rising prices ate up all the gains and then some.


Comments are closed.

Call Now