A.J. DiCintio
A funny thing happened on the way to the Fed
By A.J. DiCintio
August 3, 2013

Regarding the nominee for next Chair of the Federal Reserve, it appears that Larry Summers' stock is rising for all the excruciatingly wrong reasons, a reality always to be expected when crucially important decisions must be made in Washington.

Fortunately, those reasons have been succinctly summed up by Yahoo's Henry Blodget and Aaron Task.

Blodget writes, ". . . basically the only thing I could come up with is he [Summers] seems to be friends with Obama [and] is embedded in this group that has basically been running the United States financial architecture for two decades now."

Task agrees with his colleague: "[Summers] is friendly with the president or the president likes him, has an affinity for him. . .the only reason that anybody I have talked to [has given for] why he might get the job."

Larry Summers nominated for Fed Chair because same-old politician Barack "Banking Status Quo" Obama and Wall Street's money-sucking "vampire squids," whom Matt Taibbi and others have exposed as insatiable, amoral predators, are magnetically attracted to him?

It's enough to give a person a simultaneous case of summer chills and summer's heat stroke.

And so to warm myself up and cool myself down, I decided to make my own selection for the post, the requirements being that the person possesses a thorough knowledge of the financial system as well as the rapacious vampires preying upon it and has demonstrated courageous independence in arguing for the fiscal good of the nation, not the special few.

After agonizing over a number of excellent candidates, all of whom are known to me only from their writings, I decided to limit the pain by choosing two equally outstanding men, one a representative of the "friendly trees, prairies, [and] lost Swede towns" of Fitzgerald's Midwest, the other a person associated with the stretch of eastern soil that fascinated Gatsby's author, specifically, "that slender, riotous island" extending "due east of New York."

Following are their names and qualifications.

Born in Fort Madison, Iowa, Thomas Hoenig worked for the Kansas City Fed for 38 years, holding the post of president and CEO from 1991-2011. Furthermore, he served as a member of the Fed's Board, where he opposed Ben Bernanke's policies more than any other member, earning him the reputation of being a staunch fiscal conservative.

As a true conservative, however, the scholarly Hoenig has consistently argued for a return to the banking limitations imposed by the Glass-Steagall Act.

Moreover, he has given speeches such as "Too Big Has Failed," and written articles that include "No More Welfare for Banks" (WSJ) and "Stop Subsidizing Wall Street" (Washington Post), indicating clearly he is an open-minded, independent thinking, common sense Main Street conservative who looks out for John and Jane Citizen, unlike the pandering multitude of Wall Street/K Street conservative frauds, many of whom populate the Republican Party Establishment.

Anyone who regularly reads his blog "The Big Picture," knows that Barry Ritholtz, CEO of investment company Fusion IQ, equities and financial commentator, writer, blogger, lawyer, independent thinker, and person interested in the mathematics and science of everything from astronomy to zoology, is "riotous" only in his fervent dedication to the pursuit of truth over lies and myths, especially with respect to investing and all other things financial.

As is the case with Hoenig, Ritholtz's writings give testimony to the fact that he places the national good over the selfish desires of party, faction, industry, or other special interest, for instance, his book Bailout Nation (2009).

However, it is his fictitious FDIC letter "Dear Banker" (2012) that reveals the real Ritholtz, a man following in the steps of the wise, witty, ironic, always down to earth Ben Franklin.

Enriched with the brilliant touch of being sent to bankers by "Thomas Hoenig," who signs as "Chairman" of the Federal Deposit Insurance Corporation, the missive simply and effectively takes aim at honest banking reform by informing banks that because "leveraged speculation" has become their "primary business," the FDIC can no longer afford to put the public's money at risk by insuring deposits of institutions that engage in derivative trading, securities underwriting, or investment banking.

Making the letter all the more appealing is its style, which infuses the document with delicious, appropriately biting irony, a fact that at least in part must result from the influence a certain "slender, riotous island" has long exerted upon its author.

So, those are my choices.

Problem is, having made them, I soon realized that both men have absolutely zero chance of being nominated or approved as Chair of the Federal Reserve.

Regarding why, I'll close with the reasons, leaving the most important one for last.

As a high government official, neither Thomas Hoenig nor Barry Ritholtz supported the Clinton/Rubin "inside job" repeal of the Glass-Steagall Act. Neither advised Clinton not to regulate the dangerous, highly speculative derivatives market.

And, under Obama, neither got into the face of Paul Volcker because the economist, former Fed Chair, and hugely successful advisor to President Reagan argued for bank regulation that puts the American people first.

Working in the private sector, neither Hoenig nor Ritholtz gave horrific economic advice to a fledgling democracy, causing disastrous consequences.

Neither, while serving as president of Harvard, did either approve a multi-billion dollar derivatives trade that lost the university a billion bucks or suggest, without a bit of conclusive scientific evidence, that women might not be as good at math and science as men are.

However, as powerful as the deficiencies just presented are, they do not represent the ultimate deal breaker for my choices, which is this.

As soon as their names would be floated for the position, every member of "[the] group that has basically been running the United States financial architecture for two decades now" is certain to take advantage of every opportunity to confront them with the following perceived insult:

"I served with Larry Summers. I know Larry Summers. Larry Summers is a friend of mine. Sir, you're no Larry Summers."

Upon which, Thomas Hoenig and Barry Ritholtz are just as certain to think "To hell with the job" and respond with the simple, forceful, powerfully ironic exclamation, "Thank God!"

© A.J. DiCintio


The views expressed by RenewAmerica columnists are their own and do not necessarily reflect the position of RenewAmerica or its affiliates.
(See RenewAmerica's publishing standards.)

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A.J. DiCintio

A.J. DiCintio posts regularly at RenewAmerica and YourNews.com. He first exercised his polemical skills arguing with friends on the street corners of the working class neighborhood where he grew up. Retired from teaching, he now applies those skills, somewhat honed and polished by experience, to social/political affairs.


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