Zimbabwe Ben Defending the Fed
Hey Zimbabwe Ben, starting to feel a tad uncomfortable? I've been watching you squirm for months now, motherfucker, and you're still in the frying pan.
Federal Reserve Chairman Ben S. Bernanke said a “strong case” can be made for keeping the central bank involved in bank supervision, and subjecting interest rate policy to congressional audits may undermine confidence in monetary policy. “There is a strong case for a continued role for the Federal Reserve in bank supervision,” the Fed Chairman said in a commentary released today on the Web site of the Washington Post. “Because of our role in making monetary policy, the Fed brings unparalleled economic and financial expertise to its oversight of banks.”
Bernanke has presided over the most expansive use of Fed powers since the Great Depression. While the 55-year-old Fed chairman has said he averted a financial meltdown, lawmakers have voiced concern about potential taxpayer losses and proposed the most sweeping dismantlement of Fed authority since the creation of the institution in 1913.
The Fed chairman said legislation under consideration in Congress would impair the ability of the central bank to fulfill its basic functions.
“A number of the legislative proposals being circulated would significantly reduce the capacity of the Federal Reserve to perform its core functions,” he said. “Now more than ever, America needs a strong, nonpolitical and independent central bank with the tools to promote financial stability and to help steer our economy to recovery without inflation.”
Translated from Fedspeak that means: "get the scissors away from my nuts"
Senate Banking Committee Christopher Dodd, a Democrat from Connecticut, has criticized the central bank for lax supervision and introduced legislation this month that would strip bank oversight from the Fed and create a single bank regulator. Dodd would also limit the central bank’s ability to loan to individual companies.
“Congress has a lot of public support for an attack on the Fed,” Allan Meltzer, a Fed historian and professor at Carnegie Mellon University in Pittsburgh, said in an interview Nov. 23. “They bailed out everybody in sight.”
The Standard & Poor’s 500 Index slid 1.7 percent to 1,091.49 in New York while two-year Treasury yields fell to the lowest level since December.
Dodd and Representative Barney Frank, chairman of the House Financial Services Committee, want to take away the Fed’s rule- writing power on consumer financial products and give it to a new Consumer Financial Protection Agency.
It depends on who is holding the scissors. I'd like to throw my fuzzy hat into the ring for that one.
This isn't the sort of thing that can be easily swept under the rug and I imagine Ben Bernanke is completely pissed right now. It's not exactly his bag. The guy didn't jump into the job knowing he'd be thrust into the spotlight - look at what a scrub he was when he started - and I don't think they prepped him very well for all of this. When your PR fluff girl comes from Enron, you're not really given much of a chance from the gate.
The Big Picture:
This mornings must read work is an article in the Sunday Washington Post by none other than Ben Bernanke, titled The right reform for the Fed.
It is a rational pushback against the like of Ron Paul and Chris Dodd’s programs to either hamstring or completely get rid of the Federal Reserve.
As I have previously noted, being the only country with out a Central Bank would be like unilateral disarmament.Its a nice theory, but you will eventually be destroyed by your enemies.
Here’s helicopter Ben:
“These matters are complex, and Congress is still in the midst of considering how best to reform financial regulation. I am concerned, however, that a number of the legislative proposals being circulated would significantly reduce the capacity of the Federal Reserve to perform its core functions. Notably, some leading proposals in the Senate would strip the Fed of all its bank regulatory powers. And a House committee recently voted to repeal a 1978 provision that was intended to protect monetary policy from short-term political influence. These measures are very much out of step with the global consensus on the appropriate role of central banks, and they would seriously impair the prospects for economic and financial stability in the United States. The Fed played a major part in arresting the crisis, and we should be seeking to preserve, not degrade, the institution’s ability to foster financial stability and to promote economic recovery without inflation.
The proposed measures are at least in part the product of public anger over the financial crisis and the government’s response, particularly the rescues of some individual financial firms. The government’s actions to avoid financial collapse last fall — as distasteful and unfair as some undoubtedly were — were unfortunately necessary to prevent a global economic catastrophe that could have rivaled the Great Depression in length and severity, with profound consequences for our economy and society. (I know something about this, having spent my career prior to public service studying these issues.) My colleagues at the Federal Reserve and I were determined not to allow that to happen.”
The key line in Bernankes impassioned (or is that dispassionate?) defense is simply this: Independent does not mean unaccountable.
Burn, how much of it do you think Ben Bernanke actually believes?