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Ben Bernanke gets little credit from an ungrateful Congress Ben Bernanke gets little credit from an ungrateful Congress
(2 months later)
Among Congress' most pressing business of the day was comparing Federal Reserve Chairman Ben Bernanke to a Twinkie.Among Congress' most pressing business of the day was comparing Federal Reserve Chairman Ben Bernanke to a Twinkie.
That's what Congress is like these days. Bernanke's two-day testimony in front of lawmakers this week will likely be his last appearance on Capitol Hill in his present post. The first day (there is more in front of the Senate Thursday) was like an endless wake, which led to rambling meditation, many maudlin congratulations, thanks and eulogies from representatives who will, at most, regret losing the chance to whack their favorite economic piñata.That's what Congress is like these days. Bernanke's two-day testimony in front of lawmakers this week will likely be his last appearance on Capitol Hill in his present post. The first day (there is more in front of the Senate Thursday) was like an endless wake, which led to rambling meditation, many maudlin congratulations, thanks and eulogies from representatives who will, at most, regret losing the chance to whack their favorite economic piñata.
The most appalling implication was that Bernanke would miss this circus. "I don't want to frighten you," one lawmaker offered Bernanke, in a dubious gesture of comfort. "Even the Twinkie came back."The most appalling implication was that Bernanke would miss this circus. "I don't want to frighten you," one lawmaker offered Bernanke, in a dubious gesture of comfort. "Even the Twinkie came back."
The cameras didn't focus on Bernanke for his reply, but his reaction at leaving the Fed is probably closer to relief than fear. While both the squishy former Hostess snack and the bearded academic Fed chairman have both been described as endearing, Bernanke, unlike the Twinkie, will be gone in January and probably glad of it.The cameras didn't focus on Bernanke for his reply, but his reaction at leaving the Fed is probably closer to relief than fear. While both the squishy former Hostess snack and the bearded academic Fed chairman have both been described as endearing, Bernanke, unlike the Twinkie, will be gone in January and probably glad of it.
Bernanke's statements on Wednesday were not remarkable, given the pressure on him. He did the usual: commiserated about the weak economy and the preponderance of part-time jobs; talked about what would happen if interest rates rose; confirmed that big banks are still too big to fail; and expressed satisfaction that inflation is still relatively low. He acknowledged that, despite bringing out all sorts of tools to help fix the economy for Main Street, "We have not been as successful as we'd like to be."Bernanke's statements on Wednesday were not remarkable, given the pressure on him. He did the usual: commiserated about the weak economy and the preponderance of part-time jobs; talked about what would happen if interest rates rose; confirmed that big banks are still too big to fail; and expressed satisfaction that inflation is still relatively low. He acknowledged that, despite bringing out all sorts of tools to help fix the economy for Main Street, "We have not been as successful as we'd like to be."
He also faced down some intensely nonsensical questions. Representative Huizenga asked Bernanke if his buddy should refinance his home right now ("I'm not a qualified financial adviser," Bernanke replied); another asked Bernanke to come up with a new structure for Fannie Mae and Freddie Mac on the spot. Representative Maxine Waters noted that banks had provided adjustable-rate mortgages to people who couldn't afford them. Bernanke paused, then, with the smile of a man who knows the congressional game at last, asked:He also faced down some intensely nonsensical questions. Representative Huizenga asked Bernanke if his buddy should refinance his home right now ("I'm not a qualified financial adviser," Bernanke replied); another asked Bernanke to come up with a new structure for Fannie Mae and Freddie Mac on the spot. Representative Maxine Waters noted that banks had provided adjustable-rate mortgages to people who couldn't afford them. Bernanke paused, then, with the smile of a man who knows the congressional game at last, asked:
I … is there a question?I … is there a question?
The stock and bond markets have been obsessed with Bernanke's statements for some time, worried that he will pull away the Fed's stimulus, which acts as welfare for Wall Street. This time, however, the most interesting things said at the testimony were not said by Bernanke himself. Instead, it was the open admission by various representatives who acknowledged one true thing: they'd wrecked the economy with bad fiscal policies and all along, they expected Bernanke to fix it.The stock and bond markets have been obsessed with Bernanke's statements for some time, worried that he will pull away the Fed's stimulus, which acts as welfare for Wall Street. This time, however, the most interesting things said at the testimony were not said by Bernanke himself. Instead, it was the open admission by various representatives who acknowledged one true thing: they'd wrecked the economy with bad fiscal policies and all along, they expected Bernanke to fix it.
"The American economy is resilient," said one representative. "And I know it's strong, because it's survived Congress." He pointed out that Congress has not passed a plausible jobs bill, and he was right. Waters then asked Bernanke if "monetary policy" – the Fed's tools – could fix an economy ruined by "fiscal policy", which is the budgeting that is Congress's responsibility."The American economy is resilient," said one representative. "And I know it's strong, because it's survived Congress." He pointed out that Congress has not passed a plausible jobs bill, and he was right. Waters then asked Bernanke if "monetary policy" – the Fed's tools – could fix an economy ruined by "fiscal policy", which is the budgeting that is Congress's responsibility.
Other lawmakers asked openly hypocritical questions. Representative Fincher attacked Bernanke with allegations of helping Wall Street at the expense of Main Street, and mourned the use of taxpayer money as a subsidy for Wall Street banks. Fincher, who owns a farm, has himself received at least $3.4m in government subsidies, but his outrage doesn't extend as far as his own backyard, apparently.Other lawmakers asked openly hypocritical questions. Representative Fincher attacked Bernanke with allegations of helping Wall Street at the expense of Main Street, and mourned the use of taxpayer money as a subsidy for Wall Street banks. Fincher, who owns a farm, has himself received at least $3.4m in government subsidies, but his outrage doesn't extend as far as his own backyard, apparently.
As Fincher battered away on the subject of the bailouts, Bernanke's body language grew more defensive and his voice higher-pitched. Describing the economic crisis, he concluded, "we had to do something." "Unlike you," he didn't say, but you could read it as implied.As Fincher battered away on the subject of the bailouts, Bernanke's body language grew more defensive and his voice higher-pitched. Describing the economic crisis, he concluded, "we had to do something." "Unlike you," he didn't say, but you could read it as implied.
Bernanke's defensiveness can probably be chalked up to the one thing he could plausibly be afraid of: watching his legacy go the same way as that of former Treasury Secretary Tim Geithner, who left while excoriated for his seeming friendliness toward big banks. Bernanke has done more than Geithner did, and took on the economic job left undone by a dysfunctional Congress and a distracted president as well. He became a one-man economic Mr Fix-it, not by choice but by necessity.Bernanke's defensiveness can probably be chalked up to the one thing he could plausibly be afraid of: watching his legacy go the same way as that of former Treasury Secretary Tim Geithner, who left while excoriated for his seeming friendliness toward big banks. Bernanke has done more than Geithner did, and took on the economic job left undone by a dysfunctional Congress and a distracted president as well. He became a one-man economic Mr Fix-it, not by choice but by necessity.
Now, facing the end of his term, he is fighting an uphill battle to get the credit for the work laid at his door. He wasn't often right – in fact, in forecasting, often wrong – but his Fed did more than any other government or private entity to tackle the country's economic problems. That's something.Now, facing the end of his term, he is fighting an uphill battle to get the credit for the work laid at his door. He wasn't often right – in fact, in forecasting, often wrong – but his Fed did more than any other government or private entity to tackle the country's economic problems. That's something.
Congress seems no more determined to take on the economic duties it long ago abandoned, but congressmen and women don't seem worried, at the moment, about whether that will affect their chances of re-election. In a sane world, lawmakers who abdicate such a big responsibility wouldn't return to the Capitol.Congress seems no more determined to take on the economic duties it long ago abandoned, but congressmen and women don't seem worried, at the moment, about whether that will affect their chances of re-election. In a sane world, lawmakers who abdicate such a big responsibility wouldn't return to the Capitol.
Still, they remain confident. Hey, even the Twinkie came back.Still, they remain confident. Hey, even the Twinkie came back.
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