The Senate put Bernanke back in the Chairman's chair at the Fed. That was the right thing and the smart thing to do. The vote was close for a Fed chairman, but 70-30 was it. I could try and write about the 30 senators that voted against his confirmation, but we all know that they play to their crowd.
Blaming Bernanke for the financial crisis is not fair or even close to being correct. Giving him credit for acting above and beyond his authority when the economy could have been in bigger trouble, had he not acted, is more in line with the reality of the situation he found himself in when the meltdown occurred.
The Congress and past presidents ask too much of the Fed, and it is not right. The Fed is a central bank that has the authority to run monetary policy. Too many people think that because monetary policy is put on steroids, it can make bad fiscal policy go away. It can't. Asking the Fed to correct the mistakes made in Congress or The White House produces, in my opinion, the appearance that the Fed is responsible for everything that happens to the economy.
I would like to see the Fed go back to managing monetary policy and take a smaller role in being responsible for the overall economy. I would like to see the Fed take on the responsibility for approving all triple-A ratings by every credit rating agency before they slap their triple-A on any piece of paper that the credit rating agency is paid to rate. The conflict of interest between the credit rating agencies and the investment bankers has not been dealt with to most thinking peoples satisfaction.
The book has not be written yet, I don't believe, but some day the story of Fed Chairman Alan Greenspan will be written and the world will see what an idiot we had running the Fed for so long. His influence had a big hand in the recent financial crisis because he believed all the crap about deregulation being the best way to go. Greenspan was dead wrong, and he now knows it. But, like the barn door, it is too late.
Money and Banking need rules. Without rules, we will face another financial crisis. It is just a matter of time.
Stay tuned.
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2 comments:
Greenspan is probably soaking in his bubble bath as we write.
And, he is probably still reading Ayn Rand. : )
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