George Akerlof, a Nobel Prize- winning economist and the spouse of Federal Reserve Chair Janet Yellen, resigned an unpaid advisory position with a University of Zurich center funded by UBS AG, saying he wants to avoid an appearance of conflict of interest.
Ask a Nobel Prize-winning economist what’s the difference between the mayor of Baltimore losing taxpayer money with derivatives sold by Wall Street and millions of Americans defaulting on subprime loans and he’ll say there isn’t any: State and local governments are victims of opaque financing they don’t understand, the same way individuals go broke on borrowing at rates too good to be true.
The U.S. Federal Reserve used to be a black box. Big banks employed full-time Fed watchers to study the money markets and guess what the institution was up to. When Janet Yellen was appointed a Fed governor in 1994, it was just six months after the central bank had published for the first time a statement to announce that it had adjusted benchmark interest rates.