Former Yellen advisor calls for reforming the Fed

Andrew Levin, a professor of economics at Dartmouth College who has pushed for greater clarity of Fed's communications, now proposes a sweeping overhaul of America's central bank to improve its governance and public accountability.

... the Fed’s governance structure was established more than a century ago and no longer ensures that the Fed serves the public interest.

Furthermore, its transparency and accountability are severely deficient, which impairs appropriate Congressional oversight and undermines the public’s trust in the Fed.

The following are the four main points he made in a brief, one-page memo:

  • The Federal Reserve Must Be a Fully Public Institution.
  • The Process of Appointing Regional Fed Presidents Should Be Transparent.
  • Set Term Limits for Fed Officials.
  • Align Fed Transparency and Accountability with that of Other Key Public Institutions.

Levin's proposals attracted decent media attention, especially for the fact he advised Fed Chair Janet Yellen when she was Fed vice chair.

I particularly like the idea to award central bank policymakers one non-renewable term. That would ideally be adopted world wide as a standard practice to insulate central bankers from, however potential, pressures coming from politicians who award the mandates and whom central bankers essentially owe their jobs.