Media’s Club Fed

The media gurus love to expound on the glories of the First Amendment and the overriding importance of an open, accessible and accountable government where secrets are limited to only the most critical and immediate national security matters.

But, extend these First Amendment arguments to include the Federal Reserve System and much of the national media becomes defensive, and transforms itself into something that resembles more a protection society for the monetary managers than an aggressive watchdog demanding answers from government bureaucrats.

That’s what happened when Senator Tom Harkin and a handful of other Senators suggested that there be a full debate on the reappointment of Alan Greenspan to a third four-year term as Chairman of the Federal Reserve Board.

Some of the major media players became apoplectic at the thought that monetary policy — and the management of the world’s single most powerful economic agency — would be debated by the people’s representatives in the U. S. Senate.

The Washington Post labeled the demand for a debate on Greeenspan’s chairmanship as “obstructionist”.

The New York Times blasted Senator Harkin’s criticism of Greenspan as “thoughtless barbs.”

“Mr. Harkin’s carping is not just annoying, it is wrong,” the Times told its readers.

Wall Street Journal columnist Al Hunt, appearing on CNN television, called the Senators action on the Greenspan nomination the “outrage of the week.”

The Federal Reserve Protection Society was in full voice. And almost all of the media critics mislabeled the action of Senator Harkin and his colleagues as an effort to “block” the nominations and prevent a vote by the full Senate.

This claim was false, and the media had every reason to know that it was. From the start, Senator Harkin made it clear he had no illusions about defeating Greenspan’s nomination. He simply wanted time to debate the management of monetary policy before Greenspan was anointed again and exited into the dark recesses of the Federal Reserve.

If there were “obstructionists” it was the Senate Republican leadership which opposed the request for debate time and delayed calling up the Greenspan nomination and that of the other nominees to the Federal Reserve Board in hopes that political — and editorial — pressure could discourage debate.

To their credit, Harkin and Senators Byron Dorgan, Harry Reid and Paul Wellstone resisted the pressure and ultimately the Senate leadership gave up its delaying tactics and provided three days for a debate.

As a result, Greenspan’s slow-growth high-interest rate policies and the increasing concern about the quality of management of the entire Federal Reserve System got an airing on the Senate floor. While C-Span cameras recorded the event, the media — both print and electronic — gave only sparse mention and little substance of the debate.

The extended and vehement opposition to the debate in an institution that prides itself on its rules for open debate only serves to dramatize the protective cocoon that surrounds the Federal Reserve.

Both the Senate and House Banking Committees treat the Federal Reserve and its personnel with the softest of kid gloves. The hearings on the Board’s semi-annual reports on monetary policy have become little more than public relations opportunities for the Federal Reserve and forums for members of Congress to express their knee-jerk devotion to the Fed.

Politicians in the White House and the U. S. Congress are not likely to demand openness and accountability at the Federal Reserve so long as the national media is content to take stale handouts from the Fed in lieu of press conferences and full disclosure and lend its editorial muscle to dampen debate as it did in the Greenspan renomination.