Concerns about the independence of the Federal Reserve may be exacerbating turmoil in financial markets, says David Kotok, co-founder and chief investment officer of Cumberland Advisors, which has $2.9 billion in assets under management.
"Political shenanigans and influence pose a continuing threat to central bank independence, and the outlook in the U.S. is worsening for the Fed's independence," writes Kotok in his latest market commentary.
Kotok notes that the Federal Reserve currently "functions without a full Board of Governors because of politics. So right now the five voting presidents outnumber the three voting governors, and that is likely to be the situation for months."
He's referring to the five Fed Bank presidents who sit on the central bank's Federal Open Market Committee, which sets Fed policy including interest rates.
There are four vacancies on the seven-member Federal Reserve Board of Governors and one nominee, Marvin Goodfriend, an economics professor at Carnegie Mellon University, may not garner enough votes for confirmation.
Goodfriend won Senate Banking Committee approval last week in a tight 13-to-12 partisan vote, but no vote is scheduled yet in the full Senate. Sen. Rand Paul, R-Ky., has said he opposes Goodfriend's nomination; Sen. John McCain, R-Ariz., is ailing and may not be able to vote; and Democrats are expected to oppose his nomination.
President Donald Trump hasn't nominated others to the board.