“WATCH AND LEARN, BOYS, WATCH AND LEARN”

12/5/08

In its lead editorial today, the Wall Street Journal cited the importance of the choice of a new President of the New York Fed to replace Treasury Secretary nominee Tim Geithner. The Journal stated that the new Gotham Fed President must have “hard-money credentials,” must “(know) financial markets yet isn’t too close to Wall Street” and “should have the independent stature to rise above the inevitable turf battles that will break out among the giant commercial banks” that call New York home.

I couldn’t agree more with this list of qualifications for the very important New York Fed job. That is why I was surprised when the Journal didn’t mention the obvious nominee, Paul Volcker. Yes, I know Mr. Volcker has been selected by Mr. Obama to head a new appendage called the President’s Economic Recovery Advisory Board, but such councils and boards often end up becoming little more than vestigial organs that produce nothing more than paper, and one suspects that this Board may have been created as something of a gold watch for Mr. Volcker’s service to the Obama campaign. (See my 11/26/08 post.) Why not put a man of such stature and intellect into a real job whose importance is almost incalculable at this time of crisis, the New York Fed presidency, rather than what might turn out to be a useless sinecure? These times demand our best, and Mr. Volcker is certainly among our best.