Oct. 3 (Bloomberg) -- Federal Reserve Bank of Richmond President Jeffrey Lacker said the views of regional chiefs like himself and the 14-year tenures for Washington-based governors help protect monetary policy from political intrusion.
“Attempts at intimidation should perhaps not be surprising, given the severe economic stress facing our nation, and the fierce partisan debate that has enveloped economic policy,” Lacker said today in Madison, Wisconsin. “But these are precisely the times when the governance structure that shields the Fed from such short-term pressures is critically important.”
Lacker is defending the central bank following criticism last month from congressional Republicans concerned about record easing and a senior Democratic lawmaker opposed to the policy voice of regional presidents. Lacker has disagreed with aspects of the record stimulus led by Chairman Ben S. Bernanke, who is scheduled to testify to a congressional panel tomorrow. The Richmond Fed chief didn’t comment on the outlook for the economy or monetary policy.
The participation of presidents and the governors’ terms help “protect policymaking from short-run political pressures,” Lacker said in the text of remarks at the University of Wisconsin, where he earned a doctorate in economics. “This hybrid public-private governance structure builds in an ability to insulate policymaking from election- induced swings and to make policy choices based on long-run considerations.”
Letter to Bernanke
Lacker didn’t explicitly refer to a letter to Bernanke last month from top Republicans including House Speaker John Boehner of Ohio, urging the central bank to avoid further monetary easing. Also in September, Representative Barney Frank of Massachusetts, the senior Democrat on the House Financial Services Committee, renewed his push to remove regional Fed presidents from voting on interest-rate decisions.
Policy makers voted Sept. 21 to push down mortgage and other loan rates in an effort to spur growth and employment. The Fed plans to extend maturities of the Treasuries in its portfolio by buying $400 billion of long-term debt and selling an equal amount of shorter-term securities. Lacker isn’t a voting member of the Federal Open Market Committee this year.
Dallas Fed President Richard Fisher, Minneapolis Fed President Narayana Kocherlakota and Charles Plosser of the Philadelphia Fed voted against the FOMC decision for a second consecutive meeting. They “did not support additional policy accommodation at this time,” the Fed statement said.
Lacker dissented in January 2009 from the Fed’s purchases of housing debt and said in December 2010 that he wasn’t “well disposed” to the November decision to buy $600 billion in Treasuries.
Lacker, 56, a former head of research at the Richmond Fed, heads a district that is home to the biggest U.S. lender by assets, Bank of America Corp., based in Charlotte, North Carolina.
--Editors: James Tyson, Kevin Costelloe
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