Remember That Pundit Contest that I Lost?

My initial reaction, upon looking at the bios of the 10 winners, was that they were rather more establishment, and more "WaPo Columnist" (read conservative and mindless difference splitters) than I had hoped.

But I kind of figured that this might be sour grapes on my part, so I would let their biographies, and their submissions, percolate through my brain before I drew a firm conclusion.

Well, Kevin Drum, who already has a job as a pundit, and did not throw his hat into the Washington Post's ring, has taken a look at these winners of at this stage, and has a similar impression of them.

This is particularly notable because I am of the opinion that Drum spends too much time being a "mindless difference splitter", so he is coming from a place that is far closer to the WaPo editorial board than I am.

His take on the winners:

By the way, the ten winners include a Nobel Prize winner, a Bush 43 assistant secretary of commerce (guess which one), a senior correspondent for the American Prospect, an analyst at the Council on Foreign Relations, a former researcher at the Kennedy School of Government, an Atlantic Media fellow, and a small-town newspaper editor. Not exactly a crowd of just plain folks. It might have been more fun to read the other 4,790 entries.

Well, that's a bit harsher than I would have been, but go and read the Drum's post...It's a good read.

Here are my announcement of my submission, and my ding letter, by way of context.

My submission is after the break.

My essay (400 words)

Recently, the Federal Reserve has been on a populist bent, expanding its purview to regulate non bank lenders, issuing rulings on bank overdraft fees, demanding information from financial institutions on compensation, and issuing new consumer protections for mortgages, home-equity loans, and credit cards.

Why? Has the Fed realized that its regulatory regime has failed the general public, or is this the result of increasing calls for change from other branches of government?

This is not a conversion on the road to Damascus, but rather the Fed has decided to employ the strategy of Fabius Maximus, who used delay to give Rome victory over Carthage.

With proposals to audit their books, move consumer protection to another agency, and change the selection process for the regional Fed bank presidents, it is clear that some in Congress are looking to clip the Fed's wings.

Organizations fight fiercely for their authority, and against external oversight. The recent actions on consumer protections are part of a rear guard action to protect their bureaucratic prerogatives.

This is understandable, but it is a disservice to both the public and the Federal Reserve.

The Federal Reserve's responsibilities are to maintain a stable currency and stable economy, which involves removing the proverbial "punch bowl" when times are good, in order to prevent inflation, and to provide liquidity when times are bad to allow the economy to recover.

Additionally, the Federal Reserve structure and history make it obsessively focused on protecting the banking system, and, the banking industry. That is why it has eschewed consumer protections until recently: it is loath to reduce the profits of the banks it supervises.

No institution can do this without being firmly protected from politics, since political pressure will always favor immediate growth, even at the cost of future catastrophe. Just look at Zimbabwe.

Consumer protection does not need separation from politics though, it needs to be engaged with those consumers, whom it is charged to protect, and with the representatives who have been elected by these people.

This requires a level of transparency and responsiveness to the public that is antithetical to the primary functions of a central bank.

If the members of the Federal Reserve wish to remain independent, which is both best for the country, and for the Federal Reserve, we should move those functions to other agencies which are more directly answerable to the public.

Nothing too earth shattering, but there are a lot of better thinkers, and better writers, out there, and looking back on it, my invocation of Fabius Maximus was probably a mistake. It's too Monty Python's Life of Brian.