Bloomberg had an interesting report this week looking at the political contributions of Federal Reserve employees this election season. Unsurprisingly, Hillary Clinton is dominating the field, receiving $18,747 in contributions — over four times more than all other candidates combined. While most of the donations came from lower level Fed officials, Federal Reserve Governor Lael Brainard came under fire for making several donations to Clinton’s campaign.
It’s worth noting that Wall Street's former senator has said very little on the topic of monetary policy, however looking at who she has chosen to surround herself may demonstrates why she has become the candidate of Federal Reserve officials. One of the key personnel of her economic team is Alan Blinder, a former Federal Reserve Vice Chairman and firm critic of recent modest attempts to limit the power of the central bank. In fact, Blinder went so far as to defend the Fed’s post-crisis policy as “one of the few national policies that is working well.”
While the success of Bernie Sander’s anti-Wall Street attack has forced Clinton to adopt much of his banker-bashing rhetoric, her association with Blinder helps explain why many may find her stump speeches hollow. Blinder himself has been a vocal defender of the Fed’s Wall Street bailouts and advocates for the central bank to maintain such powers for future crises.
While she does enjoy the title of Federal Reserve favorite, Clinton does not enjoy a complete monopoly on Fed support, as Ted Cruz and Bernie Sanders both received multiple donations from Federal Reserve employees. While this may seem curious given some of the rhetoric both men use in criticizing the powers of Washington and Wall Street, a deeper look into both Cruz’s and Sanders’s monetary policy beliefs offer a hint that Fed officials have little to worry about from either potential administration.
Republican front runner Donald Trump, who has criticized the Fed throughout the campaign, hasn’t received any money from Federal Reserve employees.
One interesting take away from Bloomberg’s analysis though is how donations from Federal Reserve officials have increasingly moved to the Democratic Party during the last few election cycles.
One of the most important legacies of Congressman Ron Paul’s presidential campaigns was turning criticism of the Federal Reserve into mainstream Republican orthodoxy. During the 2012 Republican Convention, the GOP platform included a consideration of a return to the gold standard. While the reforms that have emerged from the Republican controlled-Congress are a far cry from Ron Paul’s call to End the Fed, only one Republican Senator was willing to go on record opposing the audit of the Fed he longed campaigned for while serving in the House.
The fact Jeb Hensarling, Chairman of the Financial Services Committee, is now even quoting Austrian economists is continued testament to Ron Paul’s lasting mark on monetary policy.
