Normally, working-class people don't think much about the Federal Reserve and, as a recent article in The New York Times suggests, the Federal Reserve doesn't spend much time thinking about working-class people. But at a community meeting in Cincinnati Tuesday night, low- and moderate-income families had a face-to-face encounter with Fed officials and had a frank discussion about the need for the Fed to use more of its power on behalf of average citizens.
The front line of the battle to hold the Federal Reserve accountable to citizens is as much in cities such as Cincinnati, where the impact of rising home foreclosure and dwindling credit is devastating entire neighborhoods, as it is in Washington. This is thanks to the work of National People's Action, which helped organize the meeting in Cincinnati as part of a series of town hall meetings with the Fed that began last month in Richmond.
The meetings are an historic triumph of grassroots activism, the product of an effort to "attack, confront and engage the Federal Reserve," in the words of George Goehl, the director of National People's Action, who discussed how the meetings came about at a forum sponsored by the Economic Policy Institute earlier this month. The group staged protests in Washington that got the attention of Federal Reserve Chairman Ben Bernanke, who agreed to hear out NPC's concerns about foreclosures and bank lending practices. Bernanke authorized Fed cooperation with the town hall meetings.
At a time when the Fed is getting increasing criticism for being too much of a captive of the banking industry, "we're trying to get the Fed to see this from a standpoint that they don't normally see," said Andrea Frye, communications director for National People's Action.
In addition to a town hall meeting, meeting organizers planned to take the Fed officials through some Cincinnati communities that have suffered most severely from home foreclosures. The tour would bring to life what are already stunning statistics. In the month of June alone, according to RealtyTrac, there were 256 foreclosures in the five city zip codes that have the highest number of foreclosures. The accompanying map shows that since the beginning of the year, there have been more than 500 foreclosures in one zip code, 45231.
Many of these foreclosures are the direct result of deceptive or discriminatory lending practices by financial institutions that are under the Fed's supervision. One goal of these meetings is to get the Fed to use more of its regulatory muscle to end these practices. The activists want tougher regulations, but they also want more transparency from both the banking sector and the Fed. If there's full disclosure of information about what both the Fed and the banks are doing, "when the government doesn’t regulate, the people can regulate," Goehl said.
The town halls in Cincinnati and elsewhere are part of a broader movement to bring the Fed out from behind what William Greider, in his landmark book, called "the secrets of the temple." At the EPI forum, Sen. Bernie Sanders recalled that at a recent congressional hearing he asked Bernanke to identify the institutions that received $2.2 trillion in no-interest loans from the federal government during the banking crisis. Bernanke said he could not answer that question. But he said that such loans could grow to as much as $7 trillion, without taxpayers knowing who is receiving the money.
That is why Sanders is among the growing number of members of Congress who support a bill (HR 1207, S 604) that would submit the Fed's financial books to a public audit. There is no way we should be lending billions to financial institutions, Sanders said, "with no accountability, no transparency and no honest reckoning with the American people."
Bernanke sees the Fed audit movement as a threat, but his argument that the Fed already is a far more transparent organization than it has ever been misses what's driving the populist anger behind the audit movement's popularity: The Fed is too much a creature of Wall Street and too little an agent of the public interest. The balance must change; the "secrets of the temple" should not be a secret to the taxpayers who are footing the bill. Nor should citizens have to stage protests to get the Fed to do what should come naturally: a tour of the country to see the impact of its policies on real people.
