Top of the News: Give Alabama Republican Sen. Richard Shelby points for consistency. He was one of only 10 Senators to vote against the Gramm-Leach-Bliley Act of 1999. Now he’s voted against a new term for Fed Chairman Ben Bernanke (who won Senate Banking Committee approval anyway).
Gramm-Leach-Bliley, recall, repealed the Depression-era regulations of banking, setting the table for the horrendous meal of the Great Panic and Great Recession, caused by the risky bets and outright swindles of the “financial services” industry. Both parties worshipped at the Church of the Self-Policing Free Market. Even Alan Greenspan admitted he was wrong. I’m waiting for the mea culpas of Bob Rubin and Bill Clinton.
How much Bernanke is to blame is questionable. He arrived late to the great speculative game and did an admirable job of crisis management, arguably preventing another Great Depression. His record, however, is not without its blemishes. The bailout has left a bad taste, huge commitments, uncertain safety. And Bernanke’s Fed is deaf to the jobs crisis.
The Fed was anything but transparent in the perhaps trillions of secret “lending facilities” it made available to banks during the panic. Bernanke and now Treasury Secretary Tim Geithner made terrible miscalculations in letting Lehman fail, setting off worldwide panic. Closer to home, they let Washington Mutual go down — before reversing their stance on allowing large collapses. Worst of all was AIG, with taxpayers making good all the bad bets to the advantage of the big banks that had foolishly made them.
And yet, in all this Bernanke had willing accomplices in Congress. Lawmakers failed to demand reform along with rescue, including breaking up the too-big-to-fail institutions, regulating derivatives and separating, once again, investment from commercial banking. They still balk at repealing Gramm-Leach-Bliley — hundreds of millions in lobbying money will do that.
Now the Senate will bail out Ben — Time’s person of the year — and hope his bet on low inflation is correct. What may be Bernanke’s real Achilles heel is his stance on unemployment. It may not be his undoing — but it may prove so for many of his congressional supporters.
Anyway, it’s not as if the senators were going to name Ron Paul as the new Fed chairman.
Today’s Econ Haiku:
A new boss at last
Willing to lead BofA
At least from Charlotte