A union boss to oversee Wall Street

Call it "On the New York Fed Waterfront." The man from the AFL-CIO just got a big promotion


Andrew Leonard
August 25, 2009 2:57AM (UTC)

Denis M. Hughes, a former electrician, the grandson of a boilermaker and a carpenter, and the current president of the New York AFL-CIO, was named chairman of the Federal Reserve Bank of New York on Monday.

The news shouldn't come as a huge surprise. Hughes has been acting chair since the resignation of Stephen Friedman in May, a former Goldman Sachs executive who somehow managed to continue owning Goldman-Sachs stock while supposedly overseeing the investment bank as a regulator. But the spectacle of a "union boss" -- as the Wall Street Journal put it -- chairing the Fed has caused some consternation among  socialism-fearing red-blooded Americans. Union thugs are taking over Wall Street! The horror. The horror!

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One cannot doubt that the Obama administration influenced this choice, and I look forward to hearing what progressives have to say about it. As a 2004 profile of Hughes in the New York Times makes clear, Hughes' blue-collar labor credentials are impeccable. He played a critical role in getting the minimum wage raised in New York five years ago. Combine his chairmanship with the news that the White House is considering putting another labor veteran, Ron Bloom, the current auto-restructuring czar, in charge of national "manufacturing policy" -- and it starts to get hard to argue that the change in White House occupant did not make a fundamental difference in how this country is being governed.

Of course, as far as the right has concerned, the change in occupancy is the end of the world. But Hughes did not drop into the Federal Reserve directly from Planet Obama. He was elected to the board of directors of the New York Fed back in 2004 as a "Class B Director." As the New York Fed explains:

The board of directors of the Federal Reserve Bank of New York consists of nine members, three of whom are appointed by the Board of Governors of the Federal Reserve Systems as class C directors. The remaining six (three class A and three class B directors) are elected by member banks in the Second Federal Reserve District. Class A directors are drawn from among the banking community. Class B and C directors are individuals chosen from professions outside the banking community and typically represent business, industry, agriculture, labor and consumers.

Judging from that summary, it doesn't sound all that unusual to have labor movement representatives involved with overseeing the Federal Reserve Bank. And for Hughes to have been elected by bankers during the heart of the Bush presidency suggests that maybe he earned it, the hard way.


Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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