MAY

There is an old stock exchange saying, "Sell in May and go away." For the past few days I thought that applied to me because it has been d e d/dead out there. Good thing Osama got offed over the weekend otherwise yesterday would have been a blank page. I was thinking of dredging up some new stuff on AIG and started asking around: what I got was, "AI who?" Even they don't count any more.

Thank goodness for Barney Frank. Today, undoubtably as a gift to me for all the nice things I've been saying about him, Barney introduced a piece of new legislation that, while narrower in scope, is even dumber than Dodd/Frank. Barney's new piece of genius about which he has been lisping on and on about for the better part of two years, is designed to centralize all of the monetary authority for the nation solely in the Washington Fed and its politically appointed board members. A brief review.

Presently, the monetary decisions for the nation are made through what is known as the Open Market Committee which consists of the seven members of the Washington board and four rotating members from the 12 regional Federal Reserve banks plus the President of the New York Fed who has a permanent seat. The reason for this arrangement is quite obvious: it is designed to bring to the committee a broad knowledge of regional economic conditions to enable the Fed to make the most intelligent decisions in regard to monetary policy. Barney doesn't like that. What Barney wants is for the sole authority to be lodged in D.C. The reason for that is equally obvious: it provides Barney with political influence and POWER. Barney likes power and is brutal in it's application. In other words, Barney, as opposed to most pols around the world is opposed to an independent central bank. The Golden Rule: he who controls the gold makes the rules. Barney likes that.

I don't think this is going to get much traction in this congress but there is another election in two years and another in two years and so forth. Barney isn't going anywhere and one day he just might be the chaiman again instead of the ranking member. Of course, Barney will tell anyone who will listen that his idea will make the Fed more "transparent" and "accountable." Setting aside for the moment the question as to whether that is a good thing in itself, Barney is simply being somewhat disngenuous. That's a polite way of saying he's lying through his teeth. Barney is good at that too.

But there is a problem that could certainly help Barney in his quest and it hides in plain sight at the New York Fed. As you loyal readers know I have the highest regard for the people who work at Liberty Street and over the years had a fine relationship with many of them. But the management and governship of the institution has, to say the least, been one of the most exclusive men's clubs in New York, and whilst hidden from view in the past came under the brightest of lights a couple of years ago. A brief reprise: The Suit, before his present job, was President of the Fed. Bobby Rubin begat Mr. Geithner as President, Mr. Geithner and the then present Chairman, Steve Friedman begat Billy the Dud in the time that Paulson ruled over Treasury now the home of The Suit. The connection over the past 10 years? Goldman Sachs, a connection which brought about the resignation of Friedman in a situation that presented an obvious conflict of interest. The Present Chairman? The head of the NY chapter of the AFL-CIO. With the exception of Paulson, all Democrats and all Goldie (except for the Labor guy--he probably can make more money there than as a Goldman Partner). Despite all of the sllegience to the same party, you can bet Barnie at some point is going to point to the New York Fed and say something like, "Thee, thee thee, we can't have thissss anymore!" Barney likes power. Look out Liberty Street, he's comin for you. Don't know about you, but I'm going to sit back and watch this one.