Judith Johansen has worked in many varied fields. She was the CEO of Pacific Power Corporation and is currently the President of Marylhurst University, just outside of Portland Oregon.
She also has experience in central banking. Johansen is a member of the Portland Branch of the Federal Reserve District 12. She believes independence can be crucial in relation to central banking.
The Federal Reserve covets independence. The Fed has used its independence in times of crisis, like the market crisis after 9/11. The Fed also wants independence from political influence to ensure a stable economy. Fed chairman, Ben Bernanke, opposes the Federal Reserve Transparency Act of 2009 because he believes it will lead to political influence in monetary policy.
When asked about the importance of independence in a central banking system, Judith Johansen cites the events that took place after the attacks on September 11th.
Johansen tells of the Fed taking swift action by pumping money into the financial system to assure banks could stay open and cash would flow in the financial markets. If the Fed had been subject to normal political bureaucracy and held a broader charge other than the stability of the economy, they would not have been able to act so quickly. The results would have been disastrous.
When asked about the importance of separating politics and central banking, Johansen says, “I think if you interject politics into that, it creates this external perturbation into the equation that would just be very unpredictable and just create a lot of uncertainty into the markets.”
She also talks about the need for a central bank to make decisions that affect the backbone of our national economy, which means that decisions must also be made in “an atmosphere of integrity.”
Checks and balances exist within our own government in order to maintain a balance of power and responsibility. President Johansen mentions that you wouldn’t want a Senator to call on a Supreme Court Justice for a favor because the Senator showed support on an old issue.
Johansen works for the Fed in an advisory role. Each board member reports on a specific area of expertise. Johansen reports on education because she is the president of Marylhurst University, and on transportation because she is President of the Port of Portland.
As Johansen continues to advise the Fed, the Federal Reserve Transparency act of 2009 heads to the Senate for a vote. Congress and the public want answers to Fed actions and financial bailouts, but an audit could compromise financial policy. The issue of independence and how the bill will affect the Federal Reserve’s desire to be separate from other national institutions will be decided long after the bill passes or fails.