Minneapolis Fed president Neel Kashkari is involved in educational activism and justifiably received a cease and desist letter from Senator Pat Toomey.
Excerpts (Emphasis Mine)
Dear President Kashkari: I write regarding the Federal Reserve Bank of Minneapolis’s (Minneapolis Fed) active and political lobbying efforts to change Minnesota’s constitution on K-12 education policy. These political lobbying efforts by you and other Minneapolis Fed officials, which the board of the Minneapolis Fed has shockingly endorsed, are well beyond the Federal Reserve’s mandate, violate Federal Reserve Bank policies, constitute a misuse of Minneapolis Fed resources, and ultimately undermine the Federal Reserve’s independence and credibility.
For more than two years, you have been improperly using your position as president of the Minneapolis Fed and Minneapolis Fed resources to aggressively lobby Minnesotans to support the Page Amendment, an amendment to the Minnesota constitution that you helped develop and would create a new “fundamental right to a quality public education.” This amendment is highly political, as it wades into an ongoing debate about whether government-run school systems are preferable to parental choice in education. It is also controversial because it could be used by liberals to challenge education spending levels in court and give activist judges grounds for overriding levels set by the state’s legislature, which is elected by and accountable to voters.
Setting aside the merits of your proposal, these political lobbying efforts on the issue of K-12 education are well beyond the Federal Reserve’s mandate. Nowhere in the Federal Reserve’s governing statute is there a mention of education policy.
Instead of engaging in mission creep, the Minneapolis Fed should focus on its day job of fighting the runaway 40-year-high inflation that the Federal Reserve has allowed to spiral out of control. Furthermore, it is improper for Federal Reserve officials to use their official positions and Federal Reserve resources to lobby in support of a specific public policy proposal—on any subject, let alone one that is far outside the Federal Reserve’s narrow statutory mandate—or to be engaged in political activity of any kind. Federal Reserve Bank policies explicitly prohibit political activities in order to preserve the Federal Reserve’s independence.
Moreover, you have publicly stated that your purpose for supporting the Page Amendment is explicitly political: your aim is “to solve a political problem” by using the law to “break through the political gridlock” on education issues.
Unfortunately, the Minneapolis Fed, under your leadership, has embraced politically-charged social causes far outside of the Federal Reserve’s statutory mandate. When I asked for records about these activities, the Minneapolis Fed engaged in unacceptable stonewalling of this legitimate Congressional oversight request by refusing to provide any records.
The Federal Reserve was given independence to insulate monetary policy from politics. Congress, however, has a responsibility to ensure that the Federal Reserve does not become a political actor. In order to prevent further damage to the independence and credibility of the Minneapolis Fed, I urge you to cease these political lobbying efforts that are well beyond the Federal Reserve’s mandate.
Toomey pointed out that not only is Kashkari’s activism outside of Congressional mandate, it’s also outside the bylaws of the Minneapolis Fed charter as well.
Toomey proposed Congress should examine whether the historical regional Federal Reserve Bank structure is still appropriate. According to Toomey, many of the original functions of the regional banks have been superseded by advancements in finance and commerce. Therefore, it may make sense to eliminate the Federal Reserve Banks entirely by having the Fed Board assume their responsibilities. Alternatively, Congress might consolidate them into fewer regional banks, making each a permanent voter on the Federal Open Market Committee.
Toomey copied Fed Chair Jerome Powell, numerous board members of the Federal reserve and numerous board members of the Minneapolis Fed.
Well done Senator Toomey.
This post originated on MishTalk.Com.
Thanks for Tuning In!
Please Subscribe to MishTalk Email Alerts.
Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.
If you have subscribed and do not get email alerts, please check your spam folder.
Mish
in order to preserve the Federal Reserve’s independence.” Clearly this is a political activity.
One might conclude Kashkari is suffering from delusions of grandeur.