The Case Against Bernanke

Dean Baker on his Beat The Press blog lays some pretty damning charges against Bernanke. Charges that should disqualify him from a second term as Federal Reserve Chairman. It leaves you perplexed about the "oversight" on Congress and the role of the Administration if they reappoint a guy who has fumbled his way through a recession/depression that will linger for another five years, maybe ten years.

Bernanke: He Didn't Just Miss the Housing Bubble

The NYT reports that Fed Chairman Ben Bernanke seems to be cruising to reappointment in spite of having missed the largest financial bubble in the history of the world, giving us the worst downturn since the Great Depression. The article notes that there are also critics of the way that he has handled the bailout effort, but does not provide details.These details would be helpful to readers.

First, he misled Congress last fall to help gain quick approval of the TARP. He told Congress that the commercial paper market was shutting down, so that non-financial corporations could not raise the money needed to pay their bills and meet their payrolls. In fact, the Fed had the ability to prevent a shutdown of the commercial paper market by directly buying commercial paper. Bernanke announced plans to establish a special lending facility to buy commercial paper the weekend after Congress approved the TARP.

Bernanke has also chose to keep all of the Fed's lending secret. While anyone can go to the Treasury's website and find out which banks received money from the TARP and under what terms, Bernanke has refused to make information on Fed's lending available even to members of the relevant congressional oversight committees.

Finally, Bernanke has allowed the distinction between commercial and investment banking to be obliterated. After Goldman Sachs became a bank holding company, Bernanke has allowed it to continue to operate as an investment bank. This means that it has effectively gambled with the FDIC's insurance fund money. Even proponents of the repeal of Glass Steagall insisted that they would never allow this sort of mixture of government insured deposits and speculative investment banking.

For these reasons, even some people who don't think that Bernanke's responsibility for the greatest economic disaster in 70 years disqualifies him for reappointment do not want to see him get another term as Fed chair.

The American people have paid, continue to pay, and will pay for probably the next ten years a terrible, terrible price for this corruption and incompetence at the top of their government. Literally trillions of dollars have been stolen from all citizens but there has been no accountability.