Nothing is more needed from the Fed, than some modesty and humility.

Sir, Richard McGregor in “Acrimony grows over Fed chair decision” July 27, quotes Bob Corker, a Republican senator saying “but we’d like to have someone that shows more modesty, from the standpoint of what the Federal Reserve can do, relative to spurring our economy on”.

That is absolutely correct, after all these years with bank regulators arrogantly thinking they can play risk managers of the world and allow for different capital requirements for different bank assets based on ex-ante perceived risks, all without even thinking about how this distorts the markets, there is nothing we need more than modesty and humility in our financial bureaucracy.

Just look at how much resources have been spread out by the Fed’s quantitative easing programs without caring about the financial transmission channels being all fouled and plugged up by these regulations.