With nearly half of the members of the House and Senate qualifying as millionaires, getting elected to Congress might be one of the most efficient ways to quickly accumulate wealth, short of becoming a first round draft pick, topping the pop charts, or running an organized crime ring. However, there is another group of federal employees who are 100% millionaires, and according to some, they possess too much unchecked power to influence the economy of the richest nation in the world.
Groupthink is an arising phenomenon. According to researcher Irving Janis, "The more amiability and esprit de corps there is among the members of a policy-making group, the greater the danger that independent critical thinking will be replaced by groupthink, which is likely to result in irrational and dehumanizing actions directed against out groups." One of the many criticisms of the Federal Reserve is the lack of accountability and transparency means that the seven heads of the Fed's governing board could hold unchecked power over monetary policy and act in ways not necessarily beneficial for the rest of society.
There is also concern that the Fed's influence within the economic academic community restricts intellectual freedom within the field, preventing innovation and honest analysis of policy. Considering the seemingly homogeneous social and economic characteristics of the Fed's Board of Governors, and the fact that they are not subject to any oversight from democratically elected officials, the occasional occurrence of conflicts of interest should come as no surprise.
The Federal Reserve Systems was created in 1913 by an act of Congress in response to financial panics that caused great economic instability. The Fed is responsible for conducting the nation’s monetary policy, supervising and regulating banking institutions, maintaining the stability of the financial system, and providing financial services to depository institutions, the U.S. government, and foreign official institutions.
However, vocal opponents of the Fed, such as former Congressman Ron Paul (R-Texas), argue that the organization is essentially colluding with big business to profit at the expense of ordinary tax payers. More common criticisms of the Fed include the belief that it favors particular industries and firms, creating bubbles and inefficient flows of capital. The secrecy and lack of transparency do not help its public image. Earlier this year, Vermont Senator Bernie Sanders was the chief sponsor of a bill aimed at dealing with possible conflicts of interests by members of the Fed's board of directors. The bill would disqualify bankers from sitting on the board of directors, which is tasked with regulating the financial industry. The bill probably has little chance of passing despite growing concern over Fed secrecy.
Some have taken steps in recent years to increase the transparency of Fed operations. The president and CEO of the Federal Reserve Bank of St. Louis, James Bullard, noted in an April 2012 newsletter that the Fed's preparation of quarterly reports will provide policy-makers "the opportunity to comment on many different issues and subtleties that are affecting the economy."
But there are still aspects of the current system that cause people to doubt the Fed's commitment to transparency. Given the fact that the Fed is mostly involved in macroeconomic policy, it might be hard-pressed to prove that board members' socioeconomic backgrounds have much effect on their policies.
It doesn't require a PhD in economics to see the potential problems of having an industry choose its overseers and allowing for the top brass of major for profit banks to play such a largely unchecked role in monetary policy given the potential for conflicts of interests. It contradicts human nature to think that individuals given the opportunity to benefit themselves without oversight will not at least be tempted to do so.