When I talked to Representative Kevin Brady (R., Texas) on the phone last week, he seemed like one of the nicest and most thoughtful congressmen I’ve dealt with. So I’m sorry to say that my Bloomberg View column this week concludes that his bill to change the Fed’s mandate is a mistake. It wouldn’t do much to reduce the Fed’s discretion in general and wouldn’t have prevented the quantitative easing the bill’s supporters oppose in particular. And the bill presents political problems for the Republicans too:
The presidents of the regional Feds would also get permanent voting status under the bill. Those presidents are chosen by boards that include commercial banks. The rationale for this move is that the Fed is dominated by New York and Washington. Democrats and Tea Partiers may, however, see this reform as a favor to bankers. Giving bankers more power while stiffing the unemployed doesn’t seem like a good strategy for Republicans.