The New York Times describes today (hat tip reader Peter A) how more and more Senators are voicing public opposition to a confirmation of a second term for Bernanke:
The confirmation of Ben S. Bernanke to a second four-year term as chairman of the Federal Reserve ran into further trouble on Friday as two more Democratic senators said they would vote against him…
In a statement Friday morning, Senator Barbara Boxer, Democrat of California, came out against Mr. Bernanke, who was named to his post during the Bush administration. She said she had “a lot of respect” for him and praised him for preventing the economic crisis from getting even worse. “However, it is time for a change,” she said. “It is time for Main Street to have a champion at the Fed.”
“Our next Federal Reserve chairman must represent a clean break from the failed policies of the past,” Ms. Boxer said.
Another Democratic senator, Russell D. Feingold of Wisconsin, also announced Friday that he would vote against Mr. Bernanke.
“Under the watch of Ben Bernanke, the Federal Reserve permitted grossly irresponsible financial activities that led to the worst financial crisis since the Great Depression,” Mr. Feingold said in a statement…
Several liberal Senate Democrats have said they remain undecided as well, and in a sign of the uncertainty on the Democratic side, Mr. Reid has asked Mr. McConnell to count the votes on the Republican side.
Yves here. It’s troubling that the Times repeats the “populist anger” mantra:
To some degree, Mr. Bernanke is caught up in the same kind of populist anger that defined the Massachusetts Senate race, in which the Republican candidate, Scott Brown, pulled off a remarkable upset….
Yves here. The real issue is that the Fed did a horrid job in the run-up to the crisis (although not Chairman at the time, Fed records show that Bernanke was a major architect of the super-low interest rates earlier in this decade that super-charged the credit bubbles, and has long been manifestly uninterested in regulation). So the issue is competence. The public’s anger is warranted, and reflects lack of sufficient action on real, festering problems.
This could get interesting:
Allan H. Meltzer, a professor at Carnegie Mellon University and an expert on the Fed, said that the Senate had never voted to outright reject a nominee for Fed chairman and that he knew of no instance in which the president had withdrawn the nomination of a Fed chairman after it was clear that the Senate would not confirm.
And we get the typical threats:
Senator Christopher J. Dodd, Democrat of Connecticut and the chairman of the Banking Committee, warned on Friday that a no vote would send the “worst signal to the market right now,” and could lead to an economic “tailspin.”
Bernanke and Dodd seem to have forgotten Fed chairman William McChesney Martin’s dictum, that the job of the Fed is to take the punchbowl away when the party starts getting good. Drying out Wall Street, like dealing with any addict, will not be a pleasant process.
Update 8:00 PM: Roll Call is more pointed:
Ben Bernanke’s nomination to serve a second term as chairman of the Federal Reserve appears to be in peril. Bernanke is up for a second term at the Fed; his current term expires in 10 days on Jan. 31. A handful of Senators had previously threatened to filibuster the nomination, but this week the number of opposing lawmakers appeared to grow, further dimming his prospects for installment.
At Wednesday’s Democratic caucus meeting, according to Senators, liberals spoke out against confirming Bernanke for a second term. Those liberals tried to make the case that the White House needs to put in place fresh economic advisers to focus on “Main Street” issues like unemployment rather than Wall Street concerns. Moderates were more reserved, Senators said, but have similarly withheld their support for Bernanke.
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Dodd’s fear mongering is despicable. Looks like the plan is to crash the stock market over the next week to scare the public and the politicians into confirming Bernanke. I’m just waiting for the comments about martial law being imposed if Bernanke is not confirmed.
“The real issue is that the Fed did a horrid job in the run-up to the crisis ”
For me, the issue is what he has done since the crisis began. What was sold as ‘we do this to save Main Street’ turned out to be as far from that as could be imagined. The idea that big banks are the center of the universe is simply too deeply ingrained in a whole cadre of current Washington officials; it is time to get some more realistic persons into positions of authority.
re: populist anger
If only Americans would listen to the calm and sage wisdom of the NYT.
Yes. Yves said the coverage is troubling, but I think it’s the likes of the Times themselves who are the most troubled by popular anger and the fact that this anger will become organized, one way of another.
In the meantime, we’ll just see how many people buy those online NYT subscriptions.
Thankfully, Dodd is on his way out, and yet he still manages to be an enormous B&%TT W*&^E for the big banks and Wall Street. Now please go, Chris and take the lube with you. Although I am loathe to give Federal Legislators such credit for ploys and such, don’t overlook the influence of the U.S. bond market with respect to the stock market’s sudden bad case of vertigo.
Allow me to spell it out. The funding needs of Uncle Sugar going forward are enormous. Where do you suppose the money to buy all that debt will come from? Hint: See Dick sell equities. See Jane sell equities. Watch Dick by bonds. See Jane by bonds.
“Senator Christopher J. Dodd, Democrat of Connecticut and the chairman of the Banking Committee, warned on Friday that a no vote would send the “worst signal to the market right now,” and could lead to an economic “tailspin.”
Hmm!
Let me get this straight: The mere presence of Ben Bernanke at the Fed provide a market plus-value on corporate earnings, thereby driving down the P/E ratio the virtuous way? His aura and karma shall overcome the recession’s dogma? Executives across America and the globe will feel inspired to provide qualitatively enhanced management and leadership, thanks to BB?
Shit Dawg!
We oughta keep Da Man!
CNBC reports that Donald Kohn will take over if Bernanke is not reconfirmed. Bernanke is a Fed Governor until 2020 and would still oversee the FOMC if that is the case.
More breaking news on Dodd:
Senate Banking Committee Chairman Chris Dodd opposes including a provision to audit the Federal Reserve in the Senate’s regulatory reform package…
The measure made it into the House bill in November after an unusual insurgency led by Reps. Ron Paul (R-Texas) and Alan Grayson (D-Fla.) beat back a concerted effort by the Fed to kill the provision, and won an overwhelming and bipartisan vote in the House Financial Services Committee. It was an unprecedented legislative defeat for the Federal Reserve, which has never had a real audit in its history. Little is known of what it does with the trillions of dollars at its disposal.
And if Dodd has his way, it will stay that way.
http://www.huffingtonpost.com/2010/01/22/dodd-opposes-fed-audit_n_432717.html
Hank Paulson moment here ..
Senator Christopher J. Dodd, Democrat of Connecticut and the chairman of the Banking Committee, warned on Friday that a no vote would send the “worst signal to the market right now,” and could lead to an economic “tailspin.”
LET IT AND WE WILL FACE IT!! BUT WE DON’T WANT AN EPITOME OF MORAL HAZARD WHO COULD NOT SEE THE APPROACHING TRAIN WRECK AT THE HELM!!!
The politics of this are that Bernanke has no natural constituency outside of Wall Street and Paul Krugman. So Obama could allow him to swing in the wind until the 31st, without too much blowback, appease some of the anger in the country, and keep the other atrocities that make up his economics team in place.
This is uncharted territory for this Adminstration, if Bernanke had been a liberal or progressive, he would have been dumped at the first sign of trouble. But as a pro-bankster Friedmanite pillar of casino capitalism, Obama may be more reluctant to lose one of his own. The joke (on us) would be if he named Robert Rubin to replace Bernanke.
Oh Man, my sensitive imagination just shot a mind wave of anxiety-ridden despair through my whole body like an electrical shock at that mere thought.
Dracula himself as overseer of the blood supply?
God save us from these psychopaths.
Close. Larry Summers will be either the next Fed Chairman or Secy of the Treasury depending on who has to be sacrificed first.
Dodd is the latest in the long line of those who are actually terrorists by any meaningful measure, as their goal is to spread fear to enforce their political agenda.
I wonder if errand boy Sorkin will be delivering another such threat the way he did previously for AIG and Goldman.
As a slave is a particular species of property, let us by all means inquire into the nature of property in general, and the acquisition of money, according to the manner we have proposed.
http://www.politik-web.de/template_politics.html
Three cheers for one of my senators, Barbara Boxer, for finally and at long last speaking up. I have no such hopes for Feinstein.
Dodd saw the light and resigned. I guarantee you he will become a Wall Street lobbyist!
Drink, drink drink the blood of our spirit, moneywhore addicts, psycopaths, rapers, robbers, counterfeiters, looters, mind-fukked addicts of death and rage, screen starers, numbers liars, pillage, plunder, kill, loot, destroy. Toss Metaphor toss of children into the burning pit of Carthage hell, your death victims skulls stacked high in Azetc mizery, hearts cut with obsidian knives, your Big Bonus warrior blood drink blood dance praise of bull god grain god, dance into the gates of Bergenbelsen, Auschwitz, dance yoru blood dance into Cambodian stacks of skulls,kiling fields, dance your madness, madness, madness, you psychopaths addicts of murder most foul unsex you here money whore lady says and so it is done, thusly. And you wonder why your misery lays on you like a TARP?
You, Senators, think I exxagerate? Think I’m being “hysterical”. Ha ha ha.
You know, you know. You know beyond the dark barrier of mind self into the inner garden. In the inner garden, you know.
Get your fat spreading butt cheek lobbyist-fed asses through the gate into the meadow, into the inner light of American dream light, light brighter than sunlight than money light than power light, into the God-Light, Logos-light, light of songs dreams myths regeneration, light of creation, light of the Holy Ghost of Self, in the inner Garden. Throw the murders out of the garden, throw the death out of life, put the blood back into the body, the American body.
No to Bernanke 2nd term. Just NO. Start somewhere. Start there. Start Now.
Thank God for His judgment:
Bible, the book of Revelation 18:1-4:
1. AND after these things I saw another angel come down from heaven, having great power; and the earth was lightened with his glory.
2. And he cried mightily with a strong voice, saying, Babylon the great is fallen, is fallen, and is become the habitation of devils, and the hold of every foul spirit, and a cage of every unclean and hateful bird.
3. For all nations have drunk of the wine of the wrath of her fornication, and the kings of the earth have committed fornication with her, and the merchants of the earth are waxed rich through the abundance of her delicacies.
4. And I heard another voice from heaven, saying, Come out of her, my people, that ye be not partakers of her sins, and that ye receive not of her plagues.
5. For her sins have reached unto heaven, and God hath remembered her iniquities.
6. Reward her even as she rewarded you, and double unto her double according to her works: in the cup which she hath filled fill to her double.
7. How much she hath glorified herself, and lived deliciously, so much torment and sorrow give her: for she saith in her heart, I sit a queen, and am no widow, and shall see no sorrow.
8. Therefore shall her plagues come in one day, death, and mourning, and famine; and she shall be utterly burned with fire: for strong is the Lord God who judgeth her.
9. And the kings of the earth, who have committed fornication and lived deliciously with her, shall bewail her, and lament for her, when they shall see the smoke of her burning,
10. Standing afar off for the fear of her torment, saying, Alas, alas, that great city Babylon, that mighty city! for in one hour is thy judgment come.
11. And the merchants of the earth shall weep and mourn over her; for no man buyeth their merchandise any more:
12. The merchandise of gold, and silver, and precious stones, and of pearls, and fine linen, and purple, and silk, and scarlet, and all thyine wood, and all manner vessels of ivory, and all manner vessels of most precious wood, and of brass, and iron, and marble,
13. And cinnamon, and odours, and ointments, and frankincense, and wine, and oil, and fine flour, and wheat, and beasts, and sheep, and horses, and chariots, and slaves, and souls of men.
14. And the fruits that thy soul lusted after are departed from thee, and all things which were dainty and goodly are departed from thee, and thou shalt find them no more at all.
15. The merchants of these things, which were made rich by her, shall stand afar off for the fear of her torment, weeping and wailing,
16. And saying, Alas, alas, that great city, that was clothed in fine linen, and purple, and scarlet, and decked with gold, and precious stones, and pearls!
17. For in one hour so great riches is come to nought. And every shipmaster, and all the company in ships, and sailors, and as many as trade by sea, stood afar off.
The problem is that the common people suffer the torments of hell while the wealthy are not even singed. Proof? The Nazis visited the kind of destruction you are quoting here from Revelation on the people of Europe. Those who financed the Nazis, the Ford Foundation, ITT, JP Morgan, National City Bank (CitiBank) American Express and so on down the line, were never brought to trial.
“Allan H. Meltzer, a professor at Carnegie Mellon University and an expert on the Fed, said that the Senate had never voted to outright reject a nominee for Fed chairman and that he knew of no instance in which the president had withdrawn the nomination of a Fed chairman after it was clear that the Senate would not confirm.”
This tells me just what a joke of a democracy has the US been all along. Only in former communist nations do you get this kind of approvals for the dictator’s nominations.
I think it’s time I move my remaining money out of that third world nation called the United States of America, ASAP, and forget that hell-hole of a country exists.
Vinny
I wonder if this is turning into the devil I know versus the one I don’t. If not Bernanke, then who? Whether he is reapponited or not, on the basis of the AIG mess, an audit of the Fed is necessary. That audit might point to a good replacement.
What I find missing in this news is an alternative to Bernanke. Would that we could find one that can pass vetting with a plan to the recovery the purchasing power of the currency. Bear in mind that what must transpire will be with considerable pain in addition to that we’ve already incurred. For example there is ample evidence that Fed may be holding and empty bag called Maiden Lane (I, II, & III).
The Mass election is a warning bell that I think the pols have heard. While I was once a republican and now consider myself and independent, more firmly than ever, I now believe that it is time to vote the incumbents out.
The surge of populist rhetoric is scarry. Bonuses are a legitimate problem; but, the issue is much broader and profound. The driving force is the pernicious loss of purchasing power. That fear coupled with artificially set interest rates is distorting traditional price signals.
If there is anything of merit in this current surge of populism it is that there must be a separation between ‘banking’ and ‘investment banking’. After that I believe it can be argued that most the reported bonuses should have gone to retained earnings so as to reduce leverage. Finally, it needs to be made very clear that while it is the God given right of an entrepreneur to go bankrupt, he may not do so with other peoples money without incurring draconian penalty.
Bernanke certainly is not blameless, but he did a halfway decent job during the crisis phase. I’d rather see Summers and Geithner go before Bernanke.
Correct!!
May I add Thomas Hoenig (except for readings of his economic writings and speeches, I do not know much
@Siggy:”If not Bernanke, then who?”
This is a straw man’s argument. Bernanke is not God! As De Gaulle said “the graveyards are full of indispensable men”. If Bernanke is a failure, he needs to be replaced. That’s all. No arguments here.
The government needs to search and find another person. We didn’t this fool Bernanke existed in 2001 until Bush magically found him out of nowhere and put him on the Fed. We can find another obscure or famous person and put him in as Chair.
My hope is this: America has a lot of talented economists who are Asian,Indian, Latino, Black or White. They are all waiting in the wings to be given an opportunity to serve and do the right thing. They are smart and brilliant. This idea of only people with the right last names like Rubin, Summers and Geithner can rule over us is plain dangerous. These guys have gotten us into trouble before (due to their dangerous addiction to fellow “our crowd” loyalties and money). These guys are where they are only because of their connections! Geithner is no special talent. Summers already had his chance at Treasury and was a proven crook. Rubin had his chance at well and we know how that turned out.
So You want some new names (from people who are outside this group)? Fine. How about:
Raghuram Rajan: IMF’s former Chief Economist and an American to boot, who warned Greenspan and Bernanke about the dangers of their Ultra Easy Monetary Policies? That too in Public!!
Brooksley Born: She warned Greedspan about the dangers of CDS’s.
Sheila Bair: FDIC’s tough chair. She needs to be promoted for her tough response to the crisis.
Andy Xie: Morgan Stanley’s former Chief Economist who warned about the dangers of the Credit Bubble consisently from his perch at Morgan Stanley. Similarly, his fellow economist, Stephen Roach will do a nice job as well.
Austan Goolsbee: Obama’s economic advisor during the campaign. Had lots of thoughtful ideas. He was shunned by Geithner and Summers.
See, I already have five names and I am a nobody who found these names. The White House should have far more resources than I do and connections to boot. Why can’t they com up with more names? I am sure they can.
I hope this kind of nonsense about keeping Bernanke because you are lazy to think about alternatives has to END.
Slasher,
Thank you for providing a list of potential alternatives to Bernanke. A few notes.
1. Raghuram Rajan might well be an excellent choice.
2. Brooksley Born was clearly right about regulating derivatives. However, she may not have the right background for the job. She has never studied economics.
3. Sheila Bair also has no background in economics.
4. I used to read Andy Xie’s work all of the time and liked it. However, you might want to check out why he was fired by Morgan Stanley.
5. Stephen Roach would be an excellent choice. Disclosure note. I once very briefly met him.
6. I can’t believe you would put Austan Goolsbee’s name on any list. The man who was defending the housing bubble as late as March of 2007? See “‘Irresponsible’ Mortgages Have Opened Doors to Many of the Excluded” (http://tinyurl.com/yelrblv).
From Bob McTeer:
“First, we see our government low-balling the expected returns for the Tarp investments in banks so that an additional tax on banks can be justified—including banks that never receive the investments and excluding nonbanks that did. Now proprietary trading is verboten even though there is no evidence that it had anything to do with the crisis. The same goes for hedge fund and private equity. Have we totally forgotten about the making and securitization of subprime mortgage loans? I would say the war on banks is getting curiouser and curiouser, but I’ve already used that line to describe this new wonderland.
Every politician wants to be perceived as a populist these days. They want to be perceived as anti-establishment, and I guess nothing is more identified with the establishment than the Federal Reserve. So, throwing Ben Bernanke—the guy who, along with Henry Paulson and Tim Geithner, saved the country from a second great depression—under the bus will be perceived to be good politics. I guess Geithner will be next. Taking irresponsible actions to atone for responsible actions is apparently the new norm for our leaders. Have they no shame?
Once upon a time, mainstream leaders tolerated populists nipping at their heals and pretty much ignored their irrational policy prescriptions. Of course, there was a time when populists had a policy prescription, such as a silver standard rather than a gold standard. I don’t see one now, other than to be against everything the government and the Fed try to do to stop the panic and restore health to the economy. “Just say no” makes a better slogan for teenage temptations than for economic policy. Thinking people would examine the issues and make distinctions between remedies that are reasonable and those that make no sense. Of course, thinking is suspect these days, a sign of softness.
Maybe bank bashing is the best way to encourage bank lending to support economic growth. Maybe tax increases are the best way to stimulate the economy. Maybe punishing Gentle Ben Bernanke for his good work will produce some good that I can’t conceive of. Maybe having government accountants second guessing monetary policy will improve policy. Maybe politicians following the mob will be taken for leadership. Maybe.”
I can’t for the life of me imagine why Mr. McTeer would believe the word “punishment” describes the act of replacing Chairman Bernanke with a new Chairman who is less joined at the hip to the financial looting industry and all their carnage.
The choice of that word reveals an appalling unconscious assumption among the power elite — that appointments and service are entitlements earned through some sort of state of “belonging” — sort of like a European dukedom — rather than real jobs that require some evidence of fitness that can be legitimately debated.
I have no doubt that Chairman Bernanke means well and is doing all he can, as he sees it, for the good of the nation. I have no doubt he’s a good professor of economics. Based on his public persona, he seems like a decent man. But I also have no doubt that his analytical framework was badly flawed — and he is far from alone in that regard in his profession. The debate isn’t about “punishing” him or anyone. Resuming a professorship at Princeton is hardly punishment. Many would dearly love the priviledge of such a punishment.
Some people have no sense of irony and history. Free silver versus the Gold Standard? Perhaps you need to read “Money, Gold, and the Great Depression” (http://www.federalreserve.gov/boarddocs/speeches/2004/200403022/default.htm). The paper describes how the Gold Standard acted to both intensify the Great Depression and spread it around the world.
Who wrote this paper? Ben S. Bernanke.
Naturally, the usual threats from Wall Street and their mouthpieces (Christopher Dodd, Barney Frank, etc) are mounting as the Bernanke nomination prospects head south. If this was a grown-up country, Bernanke would have already have been required to resign. He was a major architect of the crisis. His “defense” is that once he had helped produce the worst crisis in 80 years he acted in a manner that kept it from being the worst crisis in 90 years. This, with the Treasury Secretary, is one of the two most important economic jobs in the world. We can get the best people in the U.S. to take this job. We should get someone that got things right, not someone that not only was a major cause of the disaster, but also couldn’t even recognize it as a disaster until he had brought the world to the brink of a second Great Depression.
Donald Kohn (Con?) as a replacement?
How appropos.
RH
It’s astonishing to read that Senators are becoming “populist” by opposing the confirmation of somebody whose goal is to print money like hell.
Naturally, the usual threats from Wall Street and their mouthpieces (Christopher Dodd, Barney Frank, etc) are mounting as the Bernanke nomination prospects head south. If this was a grown-up country, Bernanke would have already have been required to resign. He was a major architect of the crisis. His “defense” is that once he had helped produce the worst crisis in 80 years he acted in a manner that kept it from being the worst crisis in 90 years. This, with the Treasury Secretary, is one of the two most important economic jobs in the world. We can get the best people in the U.S. to take this job. We should get someone that got things right, not someone that not only was a major cause of the disaster, but also couldn’t even recognize it as a disaster until he had brought the world to the brink of a second Great Depression.
Bernanke is psychosocially just too invested in Wall Street to objectively fulfil his paternal duties as Chairman of the Fed. Far from playing the stern dad, his over-indulgent mothering of his pampered brats on Wall Street was one of the major reasons for the current crisis. For years Bernanke enabled and encouraged the worst sort of self destructive recklessness among his banker brood; and when critics begged for intervention, he responded by smothering his bankers in a permissive cloak of denial. So when the inevitable crash occurred; he displayed the resolve and energy that only a frenetic mother can, indefatigably nurturing his fallen bankers back to some sort of health, all the while shielding them and himself from any responsibility for their actions. After all, who could have known?
But now that Wall Street is off life support, has left the hospital, and is showing all the signs of getting back to their old habits; is the permissive mother really the best archetype to fill the role of Chairman of the Federal Reserve? The usual suspects will try to make that case, albeit very discreetly. Or they will claim in a nation of 300 million people that there are no other candidates. But the truth is that a candidate must be found who can finally teach Wall Street some long overdue lessons. Lessons about boundaries, delayed gratification, that actions have consequences, and that next time they crash their RD400 at 100mph driving the wrong way on the freeway with a six pack of Mickey’s under their leather jacket and AIG on the back; that no one is going to be there to bail them out and stitch the broken pieces back together again. In short, the next Chairman of the Fed needs to be a stern disciplinarian father figure who can smack the bankers around when needed. Our nation needs to show Wall Street a whole lotta tough love.
Janet Yellen, Sheila Bair, or Elizabeth Warren could all be that Father bankers so desperately need but that Bernanke can never be.
Maybe I missed it, but I have never seen any discussion on this blog about Ron Paul. How many times are we going to see “Tall Paul is my hero” as if Volcker would reform the Fed. Granted he is making noises about some separation between banking and investment banking. So what. Any bill passed by Congress along those lines will be so watered down that we will get only the appearance of regulatory reform, while the bankers will probably have their control of the economy enhanced.
To be perfectly clear, I don’t entirely trust Ron Paul either, but who else in Congress is for getting rid of the Fed entirely. A new Fed chairman wont solve the problem, no Fed will.
Weekend talk show radio investment blabber Bob Brinker today railed against the anti-Bernanke sentiment now gathering strength in the senate. He charges that the senate is simply playing politics with the economy, warning that the markets cannot deal with rejection of Bernanke. Further, he took shots at the House “audit the FED” proposal, claiming that the bill’s author is looking to take over interest rate policy decisions.
Yves, you should consider sending Brinker your articles on the FED’s deceptive practices.
Keenan,
Since I don’t know anyone who know Brinkler (frankly never heard of him till now), better if one (or better yet more than one) reader sends it to him. Looks like self promotion otherwise. Are you game?
Hi Yves:
Bob Brinker is a kind of everyman’s financial guru who has been on ABC network radio out of WABC 770AM in NY and on-air for about 20 years ( http://www.bobbrinker.com/radio.asp )
And yes, I am game. I’ll try to get in touch with him and if I garner any attention will e mail you. He frequently has guests and it would be terrific to have the topic of FED secrecy games reach a wider audience.
Thanks!
I hate to seem dense, but I am really don’t follow radio or TV, so forgive my miscue here, and appreciate you providing background.
It was Bernanke who first used the threat of international financial chaos if the Congress insisted at looking over the shoulder at the Fed’s actions DURING the crisis.
Honest questions: Who’s Fed is this anyhow?
Whose side are they on?
Can this Fed go bankrupt?
Can the government go bankrupt?
Can the US taxpayers be bankrupted?
What is a country?
What is monetary sovereignty?
Who has the sovereign monetary power?
Is it Bernanke?
Now it is Dodd using the same threat.
This time it is just for not replacing the guy who said it the first time.
Ponder the free-marketeering gang with their fingers on the trigger of the computerized deflation of the US economy.
Monetary sovereignty.
With a pen.
Forward, ho.