New Fed Chief Must Make Jobs Top Priority

BURLINGTON, Vt., July 28 – Saying that “it’s time for new leadership at the Federal Reserve and a new approach to our troubled economy,” U.S. Sen. Bernie Sanders (I-Vt.) today urged President Obama to appoint a new central bank chairman who will “put the needs of the disappearing middle class ahead of the interests of Wall Street and the wealthy few.”

Sanders said Nobel Prize-winning economist Joseph Stiglitz or former U.S. Labor Secretary Robert Reich would be “excellent candidates” to replace Chairman Ben Bernanke when his term ends next January 31.

In a letter sent to the White House today, Sanders said the full-employment mandate in the Humphrey–Hawkins Full Employment and Balanced Growth Act must be the central bank’s “top priority.”  The law says the Fed must pursue monetary policies that “promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates.” Specifically, Sanders said the Fed should demand that large banks use $2 trillion in excess reserves now squirreled away at the central bank to provide low-interest loans to small businesses to create millions of decent-paying jobs. 

With more than 14 percent of Americans unemployed or under-employed, with youth unemployment greater than 20 percent and with black youth unemployment exceeding 40 percent, Sanders said the Fed must treat that “major crisis in unemployment” with the same urgency it showed after the 2008 financial crisis when the central bank gave $16 trillion in near zero-interest loans to banks and multi-national corporations.

“When Wall Street was on the verge of collapse, the Federal Reserve acted boldly, aggressively, and with a fierce sense of urgency to save the financial system,” Sanders said. “We need a new Fed chair who will act with the same sense of urgency to combat the unemployment crisis in America today that has left 22 million Americans without a full time job.” 

The worst economic crisis since the Great Depression, Sanders added, was a direct result of the deregulation of Wall Street promoted by former Fed Chairman Alan Greenspan and two former Treasury secretaries, Robert Rubin and Lawrence Summers. “Mr. President, it would be a tragic mistake to nominate anyone as chair of the Fed who continued those failed policies.  Instead, we need a new chair who will have the courage to hold Wall Street accountable for their fraud, recklessness and illegal behavior, and stand up for the needs of ordinary Americans.”

To read the letter, click here.