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Dec. 2 2009 - 11:03 pm | 127 views | 5 recommendations | 28 comments

Sanders’s hold on Bernanke shows rising public concern about the Fed

WASHINGTON, December 2 – Sen. Bernie Sanders (I-Vt.) today placed a hold on the nomination of Ben Bernanke for a second term as chairman of the Federal Reserve.

“The American people overwhelmingly voted last year for a change in our national priorities to put the interests of ordinary people ahead of the greed of Wall Street and the wealthy few,” Sanders said. “What the American people did not bargain for was another four years for one of the key architects of the Bush economy.”

via Release: Sanders Puts Hold on Bernanke – Newsroom: U.S. Senator Bernie Sanders (Vermont).

Bernie Sanders, as he did earlier in the year with the nomination of Gary Gensler of the CFTC, is placing a hold on the re-nomination of Ben Bernanke to the chairmanship of the Fed. I wonder sometimes if Bernie is the only Senator who is actually worrying about who is running our key financial institutions.

The problem with the Fed is that almost nobody outside the financial community understands how it works, and as a result the popular outrage over its behavior is not nearly at the level it should be. The Greenspan legacy of providing a sort of permanent, built-in backstop for Wall Street by continually loosening the money supply every time the financial services sector blows itself up in this or that idiotic speculative craze is something that should make every citizen muy enojado. Now it’s even worse — direct bailouts of companies and billions in discount window lending coupled with zero transparency, zero taxpayer access to the Fed’s books.

Bernanke doesn’t bear as much responsibility for the financial crisis as Greenspan, but his policies have certainly been in many ways a continuation of the the Greenspan era, which combined an extreme soft-touch regulatory posture (to put it mildly; it might be more accurate to say that the Fed hasn’t had a regulatory record for the last decade or so) with a Dionysan, drink-and-be-merry, fully enabling attitude toward the risk-taking crowd on Wall Street.

The Sanders release summed up Bernanke’s record:

As head of the central bank since 2006, Bernanke could have demanded that Wall Street provide adequate credit to small and medium-sized businesses to create decent-paying jobs in a productive economy, but he did not.

He could have insisted that large bailed-out banks end the usurious practice of charging interest rates of 30 percent or more on credit cards, but he did not.

He could have broken up too-big-to-fail financial institutions that took Federal Reserve assistance, but he did not.

He could have revealed which banks took more than $2 trillion in taxpayer-backed secret loans, but he did not.

Incidentally, Los Angeles congressman Brad Sherman got an excellent measure passed a few weeks back reworking section 13 (3) of the Federal Reserve Act, which until now had given the Fed basically unlimited power to directly lend money to private bodies in “unusual and exigent circumstances.” Sherman’s achievement was to get a cap placed on the amount of money the Fed can lend out under 13(3) at $4 trillion. That it took a fairly Herculean negotiation in committee to get even that high a cap passed tells you how much juice the financial services sector has on the Hill.

Earlier in the summer, Sherman had asked Bernanke if he would accept a $12 trillion cap, and Bernanke had sort of laughed off the question. Like his predecessor, who got off on stiffing inquiries by congress via opaque utterances and oracular pronouncements, Bernanke is already developing a reputation for being something of a narcissistic tool who enjoys having the world hang on his every word. Another reason to ditch him: it’s impossible to see how the Obama administration and the Democrats can have any legitimacy in claiming distance from the Bush bailout policies if Bernanke is allowed to stay.

Anyway, it’ll be interesting to see just how much opposition there will be to a second Bernanke term. I’m guessing not much, not this time. But it does seem that popular interest in what the Fed actually does is on the rise, and eventually people are going to demand a different sort of person in that seat.


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  1. collapse expand

    Most economists, even some of the more liberal ones, came out grudgingly in favor of retaining Bernanke. They held that he had succeeded in keeping the wolf from the door, and since most of them had been extremely worried a year ago, they give Bernanke credit for his results. Those that opposed the bailouts really haven’t come clean on what the end results of no bailout might have been. Had the financial system collapsed, while GS might not be getting big bonuses this year, millions more could be starving.
    So I’m in no hurry to replace Bernanke with a Wall Street insider, and I think Bernie Sanders should be careful what he wishes for. On the other hand, if this is just a shot across the bow to keep Bernanke honest, more power to our country’s lone Socialist senator.

    • collapse expand

      You’re right; the replacement would probably be yet another Wall Street zombie. If Sanders had a few compatriots with arrows as sharp and at the ready, Bernanke might be cornered into doing some good. If a newbie arrived, the process would start over, and we’d be that much further down the road before we pressed for reform

      In response to another comment. See in context »
  2. collapse expand

    hopefully they’ll get rid of him.
    but if they do, i hope it will lead to more than just another wall street tool being put in his place.
    gotta admire people like bernie sanders, alan grayson and ron paul for their efforts, though.

  3. collapse expand

    I’ll never understand why people were so up in arms about opening all of this shit to the public and actually taking some sort of ownership of the problem.

    “We can’t nationalize the banks!” they all cried…well, we already did. The difference is we gave them the money with no way to find out exactly what happened to it while these assholes take their bonuses and sip cocktails on their vacations in Greece. This stuff is so goddamn infuriating that I actually feel like I’m living in a bad episode of The Twilight Zone. The comment above me is probably right…if they ditch Bernanke they’ll stick some other stooge in there to continue the same policies that take care of their buddies and leave the rest of us to pay for it.

  4. collapse expand

    The perpetuation of bad policies that gave us trouble in the first place is the worst thing we can do. They’re continuing to prop up a failed system. I think Bernanke is the most associated with that now, at least to people to who pay a moderate amount of attention. So Bernanke is going to continue to be the symbol for all of this until he’s gone.

    “A new Rasmussen Reports national telephone survey finds that only 21% of adults believe the president should reappoint Bernanke to another four-year term. But a sizable 39% aren’t sure what the president should do.”

    Also, check out this Ron Paul reaction to Bernanke’s op-ed: http://www.youtube.com/watch?v=x1xePtuGzPY

  5. collapse expand

    So who would be a good replacement?

  6. collapse expand

    Economic terrorist Ben Bernanke should be put on trial in New York with the other terrorists Obama is bringing here for trial

  7. collapse expand

    Even if you buy the idea that Bernanke prevented a financial meltdown once the crap hit the fan (and I do, though I think there were far better ways to have dealt with the crisis, such as knocking 30 percent off the principal for every mortgage in the country, thereby heading off the subprime meltdown that launched the recession), it takes nothing away from Sanders’ bill of particulars, which have to do with what Bernanke failed to do again and again and again before the crisis that could have prevented it.

    Maybe no one else that one could reasonably expect to end up as Fed chairman would have done differently. But that itself is the very heart of the much bigger and utterly awful problem–the fact that our damned-to-hell political/financial system ensures that no one with any interest in serving the vast majority of working Americans would ever hold that job.

  8. collapse expand

    It is shocking how these plutocrats have completely taken over our country. I mean, they’ve always controlled things. But for a little while there we actually had a middle class that had a bit of security. It was fought for tooth and nail of course. It happened largely during the boomer era — when the little people decided they didn’t want to be little people anymore, so instead of workers we became “consumers” and left our power along the side of the road a long time ago, forgotten from disuse. Now Bernanke wants to finish off the middle class testifying today before congress that they should make major cuts to social security and medicare because “that’s where the money is”. No Bernanke — the money is on wall street and with the military contractors — you know, where you put it. That he has the gall to suggest gutting the only thing keeping millions of older Americans from starving on the streets while transferring the wealth of generations to wall street is just too much for this yankee to bear. He has got to go — sign the petition in support of Bernie Sanders here: http://act.boldprogressives.org/cms/sign/supportsanders/?source=dig

  9. collapse expand

    Personally I would like to see all the Clinton neo-liberals out of the White House, Clinton is as responsible as Bush for the economic melt down. Our entire economy shifted to debt based on land ownership with an emphasis on raising consumer debt. Goldman would back the banks to make bad loans, then resell them and then make side bets and play insurance on the crap table get the taxpayers (debtors) to pay the final bill and rake money off the top on every bad bet. There are wolves on both sides of the door and another crash is in the future because the system is unsustainable. Everyone holding dollars are dumping them around the world because they know it is impossible for us to pay them back.

    • collapse expand

      Although I don’t disagree completely, I’m going to add to this.

      This goes back to all the way to Reagan and this idea of a “free market” devoid of regulation and oversight.

      I find it funny that the same people who are yelling about the government giving free handouts are the same people who believe that the market system in place is actually “free.”

      Nothing is free in this world, so this idea of a free market place is bunk. We’re seeing the price paid for a “free market,” and that is the middle class carrying the burden of the majority of loss over the past 3 years.

      Further, the one thing that conservatives did have correct over the past 20 years is the idea of personal responsibility. Of course, because the way our system is set up, no politician can actually say this. But when did the responsibility of making a decision, for example, of buying more home than you can afford, or using your cc’s relentlessly to finance your over-abundant lifestyle become the fault of anyone but yourself?

      Let’s be honest, the American consumer is at much fault for this meltdown as are the business’s and banks that contributed to it.
      Middle and upper middle class folks, who tried to make a quick buck in the real estate market, or stock market, or tried to keep up with the joness 2 tax brackets above them should have thought twice before they bought that 2nd and 3rd home, or gone on the 2 week vacation every year to Hawaii, or whatever the case may be.

      Consumers need to start taking responsibility for their actions. And at the same time, start realizing that the purchasing power they have is what drives our economy, for better or for worse.

      As far as the Fed is concerned, I’d rather have a known commodity in there at this point, than someone who will have the political pressure of changing everything as soon as possible. That, in and of itself, could cause more harm than good.

      In response to another comment. See in context »
      • collapse expand

        dtafs,

        While your points are solid one must keep in mind that blaming consumers and flipping home owners is like blaming con victims. Yes they bought into something like a pyramid scheme, the thought of quick money is as any con artist can tell you irresistible, it is the American way, reinforced by cable shows and get rich schemes. If they did a cost analysis and did some research in bubbles maybe they would rethink. I am old enough to remember the last housing bubble in the seventies where my friends were buying and selling houses like baseball cards, the ones who got out early made money however I quickly discovered that I was priced out of the market and wondered how many others lost

        In response to another comment. See in context »
      • collapse expand

        dtafs,

        While your points are solid one must keep in mind that blaming consumers and flipping home owners is like blaming con victims. Yes they bought into something like a pyramid scheme, the thought of quick money is as any con artist can tell you irresistible, it is the American way, reinforced by cable shows and get rich schemes. If they did a cost analysis and did some research in bubbles maybe they would rethink. I am old enough to remember the last housing bubble in the seventies where my friends were buying and selling houses like baseball cards, the ones who got out early made money however I quickly discovered that I was priced out of the market and wondered how many others lost an opportunity for that 30 year retirement program. Remember the days when a house was a home.

        In response to another comment. See in context »
      • collapse expand

        I must differ with you dtfs. The vast majority of Americans, who haven’t seen a real wage increase in 30 years, were complete dupes — that is why 1 in 4 (!!) mortgages are “under water” right now. The middle class have been bravely and desperately clinging to “the American dream” and feeling guilty for failing to, for decades now. They want to feed their families (1 in 8 Americans on food stamps, 1 in 4 children) and live in a decent neighborhood. That is their worst crime. Sure there were scammers, aren’t their always? But this does not describe the mess that is America at this time. I forgive you for not knowing a lot of this as we are actively kept in the dark about the failings of America-style capitalism by the MSM and corporate status-quo seekers (the media is the status-quo keeper for the wealthy now), but we are going down fast and the greed merchants on wall street are not only responsible for the last 3 decades of middle class destruction with their insatiable focus on short term profit, but they then put the icing on the cake with this housing bubble. They committed the hugest criminal fraud in history and are apparently above the law. If we follow your logic to its de facto conclusion, all of those who got in trouble financially during the great bust are being punished which is just. Its the plutocrats who don’t have to suffer for their actions. Your serfdom is showing. Tell me — I’m sure you don’t have an underwater mortgage or you wouldn’t speak so sanctimoniously, but it seems the middle class is, was, and continues to be punished for its “actions”, even when its caught between the devil and the deep blue sea. Its a sad fact but most who have underwater mortgages are not defaulting “strategically” even though its in their best interests. Does wall street EVER behave with any consideration other than money? Not only don’t they, but they are also actively gaming and defrauding the masses — its not enough to sit at the top and skim the “rents” off the productive members of society — they had to rip us off too didn’t they? Don’t ya get it — they will never stop. Its been class warfare of the wealthy against the rest since money was invented. Again, “morality” for the masses and “its just business” for wall street. Make no mistake, the Fed and the banks cooked up this housing bubble with the aid of the head monkey’s ownership society scam. The rest of us were just taken for the ride. And if you knew any history, you would know this is not the first time Americans have been scammed on real estate deals by Wall Street. So next time, before you go spouting puritanical upper class propaganda how it was all of our faults, follow the money. Follow the money and see where it went during the boom. It went into bankers pockets — hell they didn’t even care about their rich shareholder buddies. It was a con and a money grab. It was the biggest in history. Until these crooks go to jail and their ill-gotten gains are confiscated to pay taxpayers back, we are officially a banana republic. And back to the topic at hand — Bernanke is in the center of this fraud, and whether he knows it or not, his pathetic attempts to gut social security and medicare are a mere continuation of the cruel and vicious class warfare his kind have perpetrated for eons. I don’t buy that he doesn’t know it. He’s not a dumb man. I just think he doesn’t care if people starve. Among the elite most people just don’t matter. They are grist for the mills my friend. Until the middle class (the poor already know this) wakes up and sees the game being played on it we are in for more rocky rides.

        In response to another comment. See in context »
        • collapse expand

          I see those numbers every day, so no need to forgive me for not knowing what i do infact know. Extremely condescending, to say the least.

          At least part of the blame still has to fall on the consumer.

          No one makes you buy a mortgage and own a home. No one makes you leverage your future by trying to create fast cash and quick dividends. No one makes you buy the extra things like high end cars, big screen tv’s, latest and greatest kitchen improvements, etc.

          You can blame the plutocrats all you want, but at the end of the day, their not signing on the dotted line for the consumer. The consumer is making that choice.

          I’m middle class. I save my money and buy things that I need to live. I’ve owned 2 homes in my short life and was lucky enough to sell the second before the bubble burst, figuring something was going to happen sooner than later.

          That’s not me having a crystal ball, or being a genius. That’s me paying attention to what was going on around me at the time, and making a sound decision not based on greed, but on common sense.

          And further, I don’t believe that my comments would lead anyone to the conclusion that people should, or are, being punished right now. I readily subscribe to the fact that a small number of people in this country essentially profit from the demise of the majority.

          However, and again, no one forces anyone to buy anything in this country. So yes, some of the blame has to fall on those who “fell for it.”

          Mind you, i don’t disagree with you about home valuations. One of the most ridiculous aspects of the home market is that prices are set, almost arbitrarily, by realtors and appraisers alike. And I feel bad for many of those people who are underwater, as we speak. But again, if you’re looking at your home as a long term investment vehicle (as it should be looked at) and not a short term cash flip, then many of those same people shouldn’t be overly worried about where they will end up, as home buying is a marathon, not a sprint.

          In response to another comment. See in context »
        • collapse expand

          “before you go spouting puritanical upper class propaganda how it was all of our faults”

          I just saw that and almost snorted out my beer.

          Since when is personal responsibility “puritanical upper class propaganda?”

          In response to another comment. See in context »
  10. collapse expand

    No matter you guys discuss here, our buddy Ben will be picked again. Main street are always be controlled by Wall street :)

  11. collapse expand

    Having met Mr. Bernanke and gone to school with his son, my general impression of him is that he’s very smart man who is rather taken with himself and his intelligence. And while he might not be an outright whore for the financial services industry like Greenspan, Paulson, or Geithner were and are, he’s sufficiently privileged that neither he nor his family will ever suffer in bad economic times, so he can propose ludicrous shit like dismantling Social Security and Medicare without ever feeling the consequences of the demise of those programs.

    I don’t think he’s a bad man, just has absolutely no idea about the real-world impacts of what he does.

    • collapse expand

      burntheretic,

      Your comment is at the heart of what is a class warfare in America. Most Americans believe they have a shot at achieving wealth and there are many stories to reinforce that belief but the average family cannot afford to send their children to the best schools nor do they have so called connections to the best jobs. The myth of America automatically discounts class and has been used by the right as a slur on the American way of life. But reality does not in anyway support the view that the average citizen has a real start to achieve his potential.

      He is a very smart man but he is also one who is an enemy of American labor, who believes that business should not only find labor at the lowest cost no matter where that may lead, but that dismantling American industry is somehow a good thing for the average citizen.

      We have lost entire industries making us a totally dependent country. We can’t make our clothes or our appliances or TVs or computers or shoes. We have seen no increase in wages so we become more and more dependent on cheap junk from overseas to satisfy our desire, desire fueled by endless advertising to define ourselves with crap.

      The bottom line is simple: Has the free world market made America stronger? The answer is tragic and no one in our political sphere dares to answer because to admit weakness is suicide. We cling to the myth while the rest of the world looks to us as completely off track. And they are right we are predatory animals on a failed mission to create an American Empire based on military strength and economic craziness.

      In response to another comment. See in context »
      • collapse expand

        libtree,

        “The working class and the employing class have nothing in common. There can be no peace so long as hunger and want are found among millions of the working people and the few, who make up the employing class, have all the good things of life.

        Between these two classes a struggle must go on until the workers of the world organize as a class, take possession of the means of production, abolish the wage system, and live in harmony with the Earth.”

        In response to another comment. See in context »
  12. collapse expand

    More and more people are realizing what a private tool for the corporate plutocracy The Fed is.

    Woodrow Wilson, after having creating the Federal Reserve in 1913, said:

    “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.”

    The progressive left (as voiced by Sanders above) is meeting the libertarian right (as voiced by Ron Paul) full circle in supporting the ABOLITION of The Fed. I read more and more comments from both camps every day aware of what a pernicious institution it is, and who want strong reform or abolition of it. (That’s the GOOD news). (The bad news is that 94% [or so-my estimate] of Washington is bought and paid for by the Financial “Industry”).

    I recommend that anyone interested in the subject read Ellen Brown’s excellent book “Web of Debt” – her website is – http://www.webofdebt.com

  13. collapse expand

    I’m quite ill of the “millions more could be starving” liberal meme as to why trillions of dollars of phony liquidity needed to be poured into the largest financial institutions on the planet, whose top management basically stayed in tact, and who were basically reset to a clean slate last Spring and are now proclaiming loudly that they have “succeeded” in averting catastrophe so should be making an even larger percentage of total production.

    Bernanke said on 60 minutes that doing the big bail outs was necessary not because the people responsible shouldn’t be held accountable, he said that the first thing to do was make sure the imminent danger was averted, then you could do what’s necessary to punish and hold accountable the parties responsible.

    He was very convincing if you remember, he likened it to an irresponsible neighbor smoking in bed: It might make sense to allow the neighbor to lose his property (and possibly his life) if his own smarts and resources weren’t enough to get him out of his fix, when the fire threatens innocent neighbors homes and lives, the first order of business needs to be putting out the fire.

    This implies of course that the second order of business isn’t rebuilding the smoking neighbors house with the neighborhood’s money and giving him a lifetime supply of sleeping pills and Marlboros, but that seems to be what we are basically doing now if one were to extend the analogy.

    I’d say Bernanke implied that the neighbor (once his house was doused in water and left in smoldering ruin) should be escorted to the courthouse and made to pay punitive damages and stripped of future access to property in the neighborhood and prohibited from doing business with the neighbors.

    It would seem my junior Senator is the only one who got that part. If no ones willing to punish the actors who made this mess, we certainly don’t want the guy whose stated policy is to enable them at the exact moment they were about to destroy themselves stay in office.

  14. collapse expand

    the -ocracy of it all

    we used to be a democracy, then we moved to meritocracy, from there we segued almost seamlessly to a plutocracy, today we’re at the kleptocracy stage of the festivities… Now, if you’ll excuse me, I’m going to go watch the stock market climb…it hit a 14 month high this morning. Happy days are here again! Right?

  15. collapse expand

    How could/would any replacement be different than Bernanke?

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