Bernanke Finally Has Some Allies

Carolyn Kaster / AP Photo

Writing in the Financial Times, Bruce Bartlet wonders if the Fed is ready to start providing monetary stimulus because the Federal Reserve Board is now fully staffed:

Obviously, the chairman of the Fed exercises his greatest influence over his fellow board members because he sees and confers with them on a daily basis. And since he knows who appointed each member, he has a good idea of where they are coming from, politically, and how best to cajole them into doing what he would like. By contrast, the chairman has no real authority over the regional banks and sees their presidents only every six weeks at FOMC meetings.

It is extremely important for the chairman to have absolute confidence of the support of the seven board members going into FOMC meetings if he wishes to move policy in a new direction. It is almost a certainty that he will get resistance from the regional bank presidents regardless of what he proposes. But if they are convinced that the board members stand in unison, the bank presidents are less likely to make waves since they know the chairman has the votes to win.