The Federal Reserve is coming under fire for holding conferences at exotic high-priced locales even after prior excursions by bailed-out companies like AIG raised the ire of government officials and taxpayers alike.
"It was totally inappropriate for the Fed to have its retreats at these very lavish resorts," said Peter Morici, professor at the University of Maryland Robert H. Smith School of Business. "At a time when so many Americans are losing their jobs and scraping along, it is very insensitive to do this. The Fed pays its expenses by printing the people's money. It was very arrogant to have these retreats."
As outlined by the Washington Post Wednesday, the Fed recently organized two conferences at luxurious venues.
Earlier this month, the San Francisco Fed held a conference on Asia at the Bacara Resort & Spa near Santa Barbara, a resort where rooms can range from $250-$400 and suites from $800 to $2,000.
Just days later, the Boston Fed organized their annual conference at the Wequassett Inn right by the water on Cape Cod, an inn where regular rooms go for about $320 a night and suites up to $1,860 a night.
Fed chief Ben Bernanke attended both conferences.
"Ben Bernanke at the Fed should take a look at what they're doing and issue guidelines so that the Federal Reserve banks around the country don't commit the same error again," Morici said. "Let's just correct it."
However, officials from both the San Francisco Fed and the Boston Fed countered that their conferences were not lavish, frivolous retreats. Moreover, they said, the costs paid by both Fed branches were not the resorts' high rates.
Santa Barbara was chosen as the site of the inaugural Asia conference because it provided easy access to attendees from Asia and around the world, a spokesperson for the San Francisco Fed said. The event's attendees were given a discounted rate of $300 a night – they had to pay for the cost of conference fees and their rooms.
"We had 100 people there and they included central bank representatives from around the world, academics, private sector representatives with expertise in Asia, Fed officials, and economists," said a spokesperson for the San Francisco Fed. "It provided a unique opportunity for high-level policymakers and researchers to interact with each other with the expectation that they can apply what they learn to policymaking going forward."
Boston Fed spokesman Tom Lavelle noted that they have been using the Wequassett Inn for over 15 years.
"We're getting a better rate there than we would in Boston during the off-season," Lavelle said, declining to state the exact rate the Boston Fed paid.
Lavelle emphasized, "This year's conference was particularly timely as we were focusing on [financial regulatory reform] so future crises can be avoided to everyone's benefit.
"We hope our conference helps advance the understanding of regulatory reform once it becomes applied," he said.
A source who has long-term experience with the Cape Cod event acknowledged that the beachfront location might cause an appearance problem, but that to think the event constituted irresponsible spending of taxpayer dollars was missing the point. With media present and massive publicity, the source pointed out, the event was hardly being kept hidden from public view.