During the last year, three vacancies have opened up to head regional Federal Reserve banks around the country. One by one, all three of the spots have gone to former insiders from Goldman Sachs. First, Goldman Sachs trustee Patrick Harker essentially picked himself to lead the Philadelphia Fed, stepping down as chair of the Philadelphia Fed Board of Directors to allow for his own selection. In August, former Goldman Sachs Vice Chair Robert Kaplan was chosen to head the Dallas Fed despite sitting on the board of directors for the headhunting firm tasked with finding a new Dallas Fed president.
Now, just this month, the Minneapolis Fed tapped Neel Kashkari, who began his banking career covering information technology software at Goldman Sachs, as its 13th president and CEO. A protégé of former Goldman chief Hank Paulson, Kashkari can hardly be counted on to side with workers over banks. As the administrator of the federal government’s bank bailout program, the Troubled Asset Relief Program, Kashkari resisted calls for more accountability and better oversight of the way financial institutions spent billions in taxpayer money. And while running as the Republican candidate for governor of California last year, Kashkari lambasted labor unions and promoted austerity.
Once Kashkari takes his seat on January 1, 2016, one-third of the 12 Federal Reserve Banks will be led by someone with strong ties to Goldman Sachs. In addition to Kashkari and his two fellow (and they are all fellow) recent appointees, the New York Fed’s president, William Dudley, is also a Goldman Sachs alumnus. He served as the bank’s chief economist for ten years as well as partner and managing director.
It’s hardly a secret that the halls of government are filled with graduates of Goldman Sachs, the controversial Wall Street investment bank. But the revolving door between Washington and Goldman has been spinning a little faster of late, depositing three of the bank’s alumni into top slots at the Federal Reserve in recent months. This should concern anyone with a commitment to democracy, transparency, and a government free of corporate influence—and it should prompt swift action from Federal Reserve Chair Janet Yellen, who has the power to stop dubious appointments and can exercise her authority to reform how Fed leaders are selected.