A Sarasota financial executive spoke in front of Congress on Monday hoping to discourage representatives from further raiding the Federal Reserve’s surplus accounts to finance highway construction, but he isn’t optimistic politicians in Washington will listen. “They should really think hard about the surplus decision they made,” said Robert Eisenbeis, vice chairman and chief monetary economist at Cumberland Advisors in Sarasota.

Eisenbeis testified before the House Subcommittee on Monetary and Trade Policy, discussing the payment of interest of reserves by the Fed. He looked at monetary policy since the start of the Great Recession in 2008 and growing concerns about the balance sheet for the Reserve. In prepared remarks, he stressed that the Fed cannot be treated like a bank, and that the ramifications of decisions must be explored. 

For his part, Eisenbeis questions decisions by the Fed regarding efforts to accelerate inflation. “Inflation should stay where it is,” he said. "We should declare victory and go home.” While in Washington, he saw a partisan divide between Democrats who were defensive of Fed actions in the past and Republicans who had concerns about growing interest payments. The Sarasota expert explained the issues leading to a lack of equilibrium with the Fed balance sheet, but Eisenbeis’ own attitude is that Congress need not meddle, and that issues like the raid of surpluses for the sake of the highway bill are more important.

“Congress has capped surplus at $10 billion,” he explained. “Everything else is transferred as remittances, which of course is cutting back on the Fed’s ability to engage in policy.”