It was inevitable that the increasing role of the Fed in our economy would draw it deeper into the morass of politics.
Now the New York Times describes the efforts of various companies–from rental car giants like Hertz to manufacturers of speedboats, snowmobiles and R.V.s–to get financial assistance from Fed lending programs. The Fed is increasingly having to make politically sensitive choices.
Highly illustrative is the R.V. case. The R.V. industry has been heavily battered by the recession. Originally, Fed and Treasury officials said they would finance only car loans, credit card loans, student loans and Small Business Administration guaranteed loans. But the R.V. people fired up their lobbysts, the president made a trip to Elkhart, Ind–a “Republican stronghold that Democrats hope to convert to their column”–and by March the Fed said it would finance equipment leasing deals, rental car fleets and “floor plan” loans, which car and R.V. dealers use to finance showroom vehicles.
What could go wrong?