The Progressive


A project of Common Dreams

For Immediate Release

Sam Quigley

Chair of Patriotic Millionaires, Former BlackRock Managing Director, Reacts to Fed Interest Rate Hike by 25 Basis Points


Earlier this afternoon, the Federal Reserve announced it will move to hike interest rates by a quarter point. The decision will add to the burden of pressure faced by some regional banks, in part by further depressing the value of the bonds that banks invest in.

Morris Pearl, a bank bailout expert, chair of Patriotic Millionaires and former managing director at BlackRock, where his team was hired by the Federal Reserve, Treasury, and FDIC to structure and assess the cost of the Citibank bailout in 2008, issued the following statement in response:

"The Fed's decision to keep pushing forward with rate hikes no matter the circumstances is a dangerous mistake. High interest rates are a blunt instrument that are not well suited to the economic realities the country now faces—and will inevitably end up doing more harm than good.

"In our modern economy, high interest rates are simply not an effective way to fight inflation. Rate hikes have disproportionately hurt just a few sectors, like housing, automobiles, and some banks and investors, while leaving many of the nation's largest employers relatively unscathed.

"Rising interest rates do nothing to address a major cause of inflation, corporate price-gouging, and actually make another long-term cause, lack of investment in new housing, worse. Instead, the Fed is betting that lowering employment and cooling wage growth is the best solution to inflation.

"Higher interest rates may be a cure for inflation, but if they end up causing another banking crisis, or pushing the economy into a recession, the cure may be worse than the disease."

The Patriotic Millionaires is a group of high-net worth Americans who share a profound concern about the destabilizing level of inequality in America. Our work centers on the two things that matter most in a capitalist democracy: power and money. Our goal is to ensure that the country's political economy is structured to meet the needs of regular Americans, rather than just millionaires. We focus on three "first" principles: a highly progressive tax system, a livable minimum wage, and equal political representation for all citizens.

(202) 446-0489