Print edition: 
WASHINGTON — Richard Fisher, president of the Federal Reserve Bank of Dallas, said he opposed the Fed's latest attempt to boost economic growth because he fears it won't work — and it could scare consumers and squeeze bank earnings.
In a speech in Dallas on Tuesday, Fisher said the action taken last week and other recent Fed moves "are likely to prove ineffective and might well be working against job creation."
At its Sept. 20-21 meeting, the Fed's policymaking committee voted 7-3 to lower mortgage and other long-term interest rates by reshuffling its $2.9 trillion investment portfolio. The Fed will shift $400 billion from short-term to longer-term Treasurys through next June.
Fisher was one of the three voting members to oppose the decision. So far, he's the only one to publicly explain his vote. The other dissenters were Philadelphia Fed President Charles Plosser and Minneapolis Fed President Narayana Kocherlakota.
In August, the three also opposed the Fed's plan to keep short-term interest rates near zero through mid-2013, as long as the economy stays weak. It was the highest level of dissent at the Fed in nearly two decades. The dissenters have expressed concern that the Fed's easy money policies risk igniting inflation.
Like Fed Chairman Ben Bernanke, Fisher called on Congress and the White House to do more to stimulate economic growth. But where they disagree is over whether the Fed should be taking action, too.
Until Congress gets its "act together," any policies adopted by the Fed "will represent nothing more than pushing on a string," Fisher said.
Businesses and banks are already sitting on plenty of cash, Fisher said. They're just too scared and cautious about the future to take risks. That suggests that cutting interest rates further from today's near-record lows won't do much to get banks to lend and businesses to invest, hire and expand.
Fisher said last week's move, dubbed Operation Twist, could prove counterproductive. It might signal to consumers that the Fed believes the economy is "in worse shape than they thought" and prompt them to hoard money, Fisher said.
It could also narrow the profits banks earn from the spread between the short-term rates they pay depositors and the longer-term rates they collect on loans.
And lower rates could force pension funds to set aside extra money to meet their future obligations to retirees — diverting money that might otherwise have gone into investments that could generate jobs, Fisher said.
Investing more heavily in longer-term Treasurys also poses risks for the Fed. When the economy strengthens, longer-term interest rates will rise, reducing the value of the bonds in the central bank's portfolio. As a result, the Fed might be tempted to keep rates low just when it should be raising them to control inflation.
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