Top of the News: Should Ben Bernanke get a second term as chairman of the Federal Reserve Board? You can vote below, but we may be asking the wrong question.
After all, many of the worthy senators speechifying and grilling Chairman Ben happily went along with years of deregulation, industry consolidation and lax oversight that helped bring on the worst crash since the Depression. All of them had a chance to reel in the excesses of the past decade, and few even spoke out. Who should keep his or her jobs? Look in the mirror, folks.
Bernanke did many things well, skillfully playing the bad hand he was dealt by Alan Greenspan and the choir at the Church of the Self-Regulating Free Market. His “whatever it takes” strategy arguably prevented another great depression. (The best account of this is found in David Wessel’s In Fed We Trust).
Yet there were problems, too. As Wessel points out, the Fed effectively became a fourth branch of government, unelected and largely unaccountable, an uneasy development for democracy. Bernanke showed just how powerful the Fed could be. The central bank also committed trillions of dollars to bail out Wall Street, including the bad actors whose swindles caused the collapse — and did this without transparency.
I would add that the Fed and other regulators — even once the Bush administration had exited stage right — consistently failed to demand meaningful reform from the financial sector in exchange for a bailout that could conceivably take a generation or more to repay. No breakup of systemically dangerous institutions. No real regulation of derivatives. No push back against the banks getting accounting rules changed to say that white is black and up is down.
Admittedly, much of this is also Congress’ responsibility, and the interest in reform is fading as the crash recedes from our addled memory and under the huge political power of the banking industry (although The American Prospect has an interesting article about continuing efforts by Sen. Maria Cantwell to have effective regulation).
Bringing the Fed under more political control of Congress is not the answer; we’ve lived through a Fed that was under the control of a questionable, and now failed, ideology. The answer begins with Congress and the Obama administration taking regulation seriously.
The Back Story: Washington state is expected to see some generally better-than-average expansion in several categories in 2010 compared with its western peers, according to the Blue Chip Economic Forecast from the W.P. Carey School of Business at Arizona State University. Still, it may not seem like much amid a very weak recovery.
The numbers: 4 percent growth in personal income; 0.2 percent drop in employment; 1.1 percent increase in population growth, and 31 percent rise in single-family housing permits (coming out of the trough of 2008-09). See the comparisons here.
Today’s Econ Haiku:
Antitrust, what’s what?
Bigger is always better