With the appointment of Neel Kashkari as President of the Federal Reserve Bank of Minneapolis, former Goldman Sachs executives will hold 4 of the 5 Fed Presidents’ seats on the powerful Federal Open Markets Committee that controls U.S. interests rates.
To curtail Wall Street’s reckless and manipulative activities that most Americans blamed for causing the Great Depression, the Banking Act of 1935 revised control of the U.S. Federal Reserve by adding a rotating five of the twelve Federal Reserve Bank Regional Presidents as voting members to the seven-member Fed Board of Governors, which has sole voting authority to set interest rates as members of the Federal Open Markets Committee (FOMC).
But in recent years, Goldman Sachs, Inc. has led Wall Street’s campaign to dominate political donations in an effort critics refer to as trying to create “The Best Government Money Can Buy.”
Since reporting records became available in 2002, Goldman Sachs and its employees have made $51.6 million in political contributions. The majority of funds have gone toward Democrats and liberal causes.
Goldman Sachs, Inc. was the top corporate donor to Democrat Barack Obama’s 2008 presidential campaign and the second-largest donor to Hillary Clinton’s campaign in the same cycle. But Goldman was also the top contributor to the 2012 campaign of Republican Mitt Romney.
For the 2016 election reporting cycle as of September 30, the “Goldman Sachs Group, Inc. Political Action Committee” had raised $811,453 and spent $694,150. At the current pace of fund raising, Goldman will far exceed the $1.6 million it raised and spent in the 2012 presidential cycle.
The 42-year-old Kashkari worked at Goldman Sachs for 5 years, rising to the position of Vice President. He was chosen by Treasury Secretary and former head of Goldman Sachs Henry Paulson in October 2008 at the height of the financial crisis to oversee the $700 billion Troubled Asset Relief Program (TARP). He later ran for Governor of California before joining Pacific Investment Management Company (PIMCO) as a Managing Director.
On Feb. 1, 2016, Kashkari will replace Narayana Kocherlakota, who served since 2009 as President and CEO of the Federal Reserve Bank of Minneapolis. Kocherlakota is widely considered the most “dovish” member of the FMOC, and has vigorously argued all year that the Fed should not raise rates in 2015.
Since rumors stated circulating on Wall Street in mid-October that Kocherlakota would leave, the interest rate on the 10-year U.S. Treasury Bond that tends to set U.S. mortgage rates has spiked by 17 percent, from less than 2 percent to 2.34 percent.
Because of the rotation schedule of the 12 regional Fed Presidents, beginning on Jan. 1, 2017, four men–former Goldman Sachs executives William Dudley, as President of the NY Fed; President Robert Kaplan, as President of the Dallas Fed; Patrick Harker, as President of the Philadelphia Fed; and Neel Kashkari, as President of the Minneapolis Fed–will hold one0third of voting control of American interest rate policy.
Regardless of whether a Democrat or a Republican is inaugurated as U.S. President on January 20, 2017, he or she will need to cooperate with what will undoubtedly be referred to as the “Federal Reserve of Goldman Sachs.”