By Dow Jones Business News,
February 11, 2014, 09:42:00 PM EDT
By Michael S. Derby and Rob Curran
DALLAS--Federal Reserve Bank of Dallas President Richard Fisher said Tuesday if the economy isn't growing more
strongly, it's Congress's fault.
"It is my firm belief that the fault in our economy lies not in monetary policy but in a feckless federal government
that simply cannot get its fiscal and regulatory policy geared so as to encourage business to take the copious amount of
money we at the Fed have created and put it to work creating jobs and growing our economy," Mr. Fisher said, in a speech
delivered to members of accounting trade group Financial Executives International in Dallas.
"Fiscal policy is not only 'not an ally of U.S. growth,' it is its enemy," the official said.
Mr. Fisher reiterated the Fed has done a lot to help the economy, and it has expanded the money supply by leaps and
bounds. He said the amount of "excess reserves...lying fallow" on the balance sheets of U.S. depositary institutions
have grown exponentially since the end of 2007. He explained "one is hard pressed to argue that there is much efficacy
derived from additional expansion of the Fed's balance sheet. This is why I've been such a strong proponent of dialing
back our large-scale asset purchases."
Mr. Fisher said his main worry as a central banker is not inflation but the continued lack of job growth for American
Mr. Fisher, who has been a frequent speaker on economic and monetary policy matters, has long opposed the Fed's bond-
buying stimulus program. He believes that it offers little economic benefit, and has said that excessive Fed liquidity
has distorted financial markets.
Mr. Fisher, who is a voting member of the monetary policy setting Federal Open Market Committee this year, has been
broadly supportive of the Fed decision to slow the pace of its bond buying. Most expect to see the purchases of
securities ended later this year. The Fed has cut its asset purchases at the last two meetings, and is now buying $65
billion a month.
Mr. Fisher's speech followed in the wake of congressional testimony by Federal Reserve Chairwoman Janet Yellen. In her
remarks, the central bank leader offered few surprises, as she pointed to a gradual reduction in Fed stimulus as long as
the economy continues to meet expectations.
"I thought she did a pretty good job (today)," Fisher said. "Janet Yellen is no longer Janet Yellen. (She's) no longer
an individual voice at the table -- she chairs the Federal Open Market Committee. Her job is to represent all of us, and
I thought she did a great job in the House, and I think she'll do a great job in the Senate."
During a questions-and-answer session, Mr. Fisher defended the idea of the Fed's independence.
"You know how well Congress has done with the budget...do you want 536 people running monetary policy?" he said.
"You have to have an independent central bank. No economy has succeeded without an independent central bank."
During the Q&A session, Mr. Fisher also reiterated his call to amend and simplify the Dodd-Frank financial reforms. He
said the 2010 legislation had failed to address the concentration of assets in "systemically important financial
institutions." That left regional and community banks at a competitive disadvantage, and also left the potential for
financial shocks in the system. The scale and complexity of some banks was such that nobody could accurately assess
risks in their business, he said.
"If you could look at J.P. Morgan's financial disclosures and tell me what their net derivatives position is, I will
give you $100 million," Mr. Fisher said, adding that he might have to honor the wager in Zimbabwean dollars.
Write to Michael S. Derby at email@example.com and Rob Curran at firstname.lastname@example.org
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