NY Fed Rewards Half-Truths
Last week the Federal Reserve Bank of New York named the winners in its Financial Awareness Video Festivals. The winning videos were both vague and succinct. None of the videos made any mention of the role of government in financial decision-making.
The annual contest is run in the tri-state area of New York/New Jersey/Connecticut and in Puerto Rico. The tri-state winners are students from LaGuardia Community College, whose video "Repair your credit—Repair your life" aimed to remind young people that good credit allows for people to take advantage of opportunities they wouldn't otherwise have.
Irony doesn't even begin to describe the Fed's involvement in any effort to inspire, encourage, or reward financial responsiblility.
As individuals when we experience a drop in our credit score we figure out why it happened and remedy the issue in an effort to restore the faith financial institutions have to lend to us. Why then, is the government not doing the same thing?
Instead our credit rating has been demoted twice, the bonds held by the lender of last resort are no longer looked at as a financial safety net, and the regional banks are just standing there.
But this is no surprise, during the Great Depression the Fed stood by and watched as banks were unable to accommodate large bank runs, proving its inability to perform its sole task.
The idea that this institution can accurately judge what it means to be financially responsible was not depicted in the winning video or by any of the finalists. If no one brought this up, how helpful are these videos?
The video ended with a young man trading his chefs hat for a blazer and saying "It's worth it in the end because new doors opened up and new opportunities come along," but imagine if instead he said, "Ending the Fed is worth it in the end, we'll know what our time and money are really worth."
Individual responsibility is important, but the Fed recognizing only those who tell part of the story by just advocating for greater personal responsibility, and not leading by example, sends the wrong message.