Trump is meeting with an ex-bank CEO who wants to abolish the US Federal Reserve Bob Bryan
Nov 29, 2016, 6:45 AM
Picture: Getty Images
As President-elect’s Donald Trump’s transition rolls on, more and more attention is being paid to possible selections for a variety of high ranking positions, and meetings that might help decide these appointments.
On Monday, Trump will meet with John Allison, the former CEO of the Winston-Salem, NC-based bank BB&T and former CEO of the conservative think tank The Cato Institute.
While it is unclear what Allison is being considered for, there have been reports that he is being considered for the Chair of the Securities and Exchange Commission, Treasury Secretary, or a spot as the Federal Reserve Governor of Oversight.
The last possible appointment is interesting given Trump’s statements on the campaign trail have questioned the future of the Federal Reserve’s political independence. Allison actually takes that rhetoric a step further. While running the The Cato Institute, Allison wrote a paper in support of abolishing the Fed altogether.
“I would get rid of the Federal Reserve because the volatility in the economy is primarily caused by the Fed,” wrote Allison in a 2014 article for the Cato Journal, a publication of the Institute.
Allison said in the article that simply allowing the market to regulate itself would be preferable to the Fed harming the stability of the financial system.
“When the Fed is radically changing the money supply, distorting interest rates, and over-regulating the financial sector, it makes rational economic calculation difficult,” wrote Allison. “Markets do form bubbles, but the Fed makes them worse.”
Allison, in the same paper, also suggested that the government’s practice of insuring bank deposits up to $250,000 should be abolished and the US should go back to a banking system backed by “a market standard such as gold.”
Allison also argued for higher capital reserves of up to 20% of assets at banks. On the other hand, he also argued that the government should repeal three of the broadest banking regulations.
“We should raise capital standards, but it is even more important to eliminate burdensome regulations — including Dodd-Frank, the Community Reinvestment Act, and Truth in Lending,” wrote Allison. “About 25% of a bank’s personnel cost relates to regulations. Banks cannot pay the regulatory costs and have high capital standards.”
This is similar to Trump’s desire to roll back regulation — including Dodd-Frank — on financial institutions, though he has back-tracked somewhat on those promises.
It is unclear if any of Allison’s policy views will ultimately become a part of Trump’s plan going forward, but given the unconventional nature of his ideas, the meeting is notable.
Poster Comment:
END THE FED!