Federal Reserve Board Governor Lael Brainard’s campaign contributions are in the news today, as she recently maxed out her contributions to Hillary Clinton’s presidential campaign. According to CNBC, Brainard is the only Federal Reserve Board Governor since 1990 to donate to a presidential campaign. While it isn’t illegal for Fed Governors to contribute to political campaigns, Fed officials have avoided making such contributions in order to avoid the appearance of impropriety and avoid compromising the Fed’s claims of political independence.
The younger generation of officials, however, such as Brainard and newly-appointed Minneapolis Fed President Neel Kashkari, have cut their teeth as political appointees. Both Brainard and Kashkari previously served as political appointees in the Treasury Department. As executive agencies are overtly political, so too are the appointees who serve in them, and they have brought that political attitude with them to the Fed.
While the Fed has always been a tool for the President to enact the monetary policy he wants, Fed officials have always tried to distance themselves publicly from the appearance of acting politically. With Kashkari’s actions in Minneapolis and now Brainard’s campaign contributions coming to light, that public facade of separation of policy and politics that the Fed has tried so hard to maintain is finally starting to crumble. The reality is that Fed officials are not dispassionate, apolitical actors above the fray, seeking only to work in the best interest of the country. They are appointees, and like any other appointees they serve those who appoint them. Once that realization sets in in Washington, perhaps Congress might finally take some steps to enact real oversight over the Federal Reserve.
