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10 Reasons Bernanke Should Be Fired
Evan Vucci / AP Photo
Ben Bernanke is before the Senate today in a bid to be reconfirmed as Fed chief. From his muddled message on transparency to his failure to anticipate the crisis, Nomi Prins has 10 good reasons for the Senate to turn him down.
If Ben Bernanke’s predecessor as Federal Reserve chairman, Alan Greenspan, could be dubbed the Maestro, Bernanke surely deserves to be called the Magician. His mastery of illusion and deflection is impeccable.
Bernanke, who goes before the Senate Banking Committee on Thursday in a bid to be confirmed to a second term, still wants us to believe he “done good” by cleaning up the financial mess that was created on his watch. But here are 10 reasons Bernanke shouldn’t be reconfirmed:
A confirmation of Bernanke would affirm that the Fed can do whatever it wants, no matter what the cost, as long as we live under the ethos that making bad decisions is better than making worse ones.
1) His view of what constitutes “transparency” is dubious. About 300 members of Congress have thrown their support behind Ron Paul’s HR1207 Audit the Fed bill, which would further inspect the Fed’s clandestine love affair with the big banks. But Bernanke has told Congress that providing too much detail about what the Fed did for the banks would be “counterproductive.” Thus, the man who wrote in a pre-emptive Washington Post op-ed that “In its making of monetary policy, the Fed is highly transparent” doesn’t feel the same way about its Wall Street Welfare strategy.
2) He’s managed to raise more anti-Fed sentiment than any other Fed leader. Senator Bernie Sanders (I-VT) put a hold on Bernanke’s confirmation Wednesday, meaning it would take 60 senators to override Sanders to confirm Bernanke, instead of a simple majority. The chairman of the Senate Banking Committee, Christopher Dodd (D-CT), has called for stripping the Federal Reserve of its supervisory powers. “StopBailoutBen” petitions litter the Internet. Many other Washingtonians have called for a reduction in the Fed’s powers, even as others, notably President Obama and Treasury Secretary Tim Geithner, want to pile it on thicker.
3) Bernanke didn’t have a clue or a prevention strategy during the buildup to the second biggest financial crisis in U.S. history. Despite being a noted scholar of the first Great Depression, he missed the rapid increase in foreclosures during 2006 and 2007, the $14 trillion subprime-related toxic asset bubble, $2 trillion buildup of collateralized debt obligations, extreme leverage buildup that laced past mega-profits, labyrinth of off-book bank games, and every credit derivatives issue.
4) He abetted the notion of too big to fail. Bernanke instigated a slew of new bank mergers that have rendered the biggest banks bigger and more complex, and harder to regulate than ever before. In 2004, the five largest U.S. banks held 34 percent of all commercial bank assets; today they hold 48 percent.
5) He invited investment banks to come under the federal subsidy tent. Moniker changes approved by the Fed on Bernanke’s watch mean that former investment banks Goldman Sachs and Morgan Stanley became bank holding companies, with access to federal perks, despite taking investment banking-type risk.
6) As far as Main Street, Bernanke’s accuracy is about as bad as Dick Cheney’s with a rifle. In June 2008, he said, “despite a recent spike in the nation’s unemployment rate, the danger that the economy has fallen into a ‘substantial downturn’ appears to have waned.” That was when unemployment was 5.6 percent; it’s now at 10.2 percent.
7) He lied about loosening credit. He vowed that dumping money into Wall Street would help the free flow of credit—which it did for the banks, but not for ordinary Americans—and made eerie promises that “More capital injections and guarantees may become necessary” to keep the credit wheels greased. So what? Last month, he acknowledged that despite the Fed’s unprecedented assistance, “bank lending has contracted sharply this year.”
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Investigative journalist and syndicated columnist Diane Dimond has covered the Michael Jackson story since 1993 when she first broke the news that the King of Pop was under investigation for child molestation. She is author of the book, Be Careful Who You Love—Inside the Michael Jackson Case. She lives in New York with her husband, broadcast journalist Michael Schoen.
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Nomi Prins is author of It Takes a Pillage: Behind the Bonuses, Bailouts, and Backroom Deals from Washington to Wall Street (Wiley, September, 2009). Before becoming a journalist, she worked on Wall Street as a managing director at Goldman Sachs, and running the international analytics group at Bear Stearns in London.
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Nomi Prins is author of It Takes a Pillage: Behind the Bonuses, Bailouts, and Backroom Deals from Washington to Wall Street (Wiley, September, 2009). Before becoming a journalist, she worked on Wall Street as a managing director at Goldman Sachs, and running the international analytics group at Bear Stearns in London.
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Nomi Prins is author of It Takes a Pillage: Behind the Bonuses, Bailouts, and Backroom Deals from Washington to Wall Street (Wiley, September, 2009). Before becoming a journalist, she worked on Wall Street as a managing director at Goldman Sachs, and running the international analytics group at Bear Stearns in London.
Bill-R
Great piece but I needed little more than the following to convince me that this guy and--to be fair--his predecessor were out to lunch:
http://www.youtube.com/watch?v=HQ79Pt2GNJo
I'm of the school that the problem is the Federal Reserve not its specific occupant. End the Fed!
http://www.amazon.com/End-Fed-Ron-Paul/dp/0446549193/
estcruzer
Cleaning the Fed starts with Transparency - then it won't matter who is running the show - all of us will be resonsible.
sonofloud
Thank you Bernie Sanders.....one of the few politicans who puts the American people ahead of corporations.
WASHINGTON, December 2 - Sen. Bernie Sanders (I-Vt.) today placed a hold on the nomination of Ben Bernanke for a second term as chairman of the Federal Reserve.
"The American people overwhelmingly voted last year for a change in our national priorities to put the interests of ordinary people ahead of the greed of Wall Street and the wealthy few," Sanders said. "What the American people did not bargain for was another four years for one of the key architects of the Bush economy."
http://www.americablog.com
UncleSam
"this guy and his predecessor were out to lunch"
Matt Tiabbi had it right in his Rolling Stone piece about the people who caused the downturn. Banks need more regulation, not less, and no more golden parachutes to reward failure that keeps on. giving. Before the money was handed over without strings attached by HankiePankie Paulson, the banks should have been charged the same interest rates as card holders (how does 29 % compounded monthly sound!!!) and the dudes that felt entitled to bonuses, told to hit the road. How many foreclosures could have been prevented? How many businesses could have been saved?
The Fed is too big too fail and needs to be regulated by oversight. The banks have been immune because of strong lobbies for too long. Dodd is at the top of their list and now he wants to switch teams?! ! The hypocrisy!
magicmary
Thank You Bernie!! Good to see you on the talk shows lately too! Gives me hope.
How about Elizabeth Warren for the fed? Go check her article on Huffpo today.
JayGetty
Obama's choice for czars and cabinet positions have been America's worst nightmare, even if Americans are still out to lunch. I will take Ben Bernanke over anything Obumer would select.
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JasonPacifico
Well, in regard to your perspective, it's really too narrow for you, I think your political perspective, creative informed ideas, and narrative of the "issues" should be on abolishing the Fed (Ron Paul had a bill in 2007-2008 to abolish the FED, a similar bill may have a chance in 2010). But unlike Ron Paul, your more fully empathetic perspective and as a author and writer could inspire the "change" the country needs.
I was contemplating that perhaps a proposal on a new Central Bank where instead of the 12 Regional Banks being owned by JP Morgan Chase, Citigroup (formerly Chase National, First National Bank and National City Bank ) and the international Banking Consortium of Banks (Rothschild Banks of London and Berlin, Lazard Brothers Bank of Paris, Israel Moses Sieff Banks of Italy, Warburg Bank of Hamburg, Germany and Amsterdam, Kuhn Loeb Bank of New York, Goldman Sachs Bank of New York) would be abolished and replace in a new central (Constitutional) bank.
The new Central Bank, for example, rather than a consortium of banks would be owned by 260 million Americans as shareholders, who perhaps would get a share from the currency, of let's say, $6000. a year. Low actuary mortgages for primary homes of 1 percent (where 12 percent of the monthly payments, for example, could be an investment in a mutual fund in income back to the homeowner) A banking multiplier, as in the fractional reserve banking, on job creation and middle-class wages up to $90,000 a year (30 to 1 multiplier on employers putting funds for wages into a payroll account of $3000--which would create "out of a realization"-- the $90,000 wage, and not "out of thin air" for debt like the 1.8 trillion from TARP (of 23 trillion created for TARP,TALP, PPIP, and Guarantees).
A formula for new business start-ups of 12 to 1 multiplier, for example, on every $100,000 for business investment, it would be multiplied to 1.2 million with employees as shareholders for new factories, business, etc.
It would be nice to see someone like you put together in an article, a comprehensive proposal on a new Central Bank, the article I'm sure would turn out to be a book. Please refer to the following schematic:
Source: ** Federal Reserve Directors: A Study of Corporate and Banking Influence ** - - Published 1976
The David Rockefeller chart shows the link between the Federal Reserve Bank of New York, Standard Oil of Indiana, General Motors and Allied Chemical Corportion (Eugene Meyer family) and Equitable Life (J. P. Morgan).
DAVID ROCKEFELLER
- ----------------------------
Chairman of the Board
Chase Manhattan Corp
|
|
______|_______________________
Chase Manhattan Corp. |
Officer & Director Interlocks|---------------------
------|----------------------- |
| |
Private Investment Co. for America Allied Chemicals Corp.
| |
Firestone Tire & Rubber Company General Motors
| |
Orion Multinational Services Ltd. Rockefeller Family & Associates
| |
ASARCO. Inc Chrysler Corp.
| |
Southern Peru Copper Corp. Intl' Basic Economy Corp.
| |
Industrial Minerva Mexico S.A. R.H. Macy & Co.
| |
Continental Corp. Selected Risk Investments S.A.
| |
Honeywell Inc. Omega Fund, Inc.
| |
Northwest Airlines, Inc. Squibb Corporation
| |
Northwestern Bell Telephone Co. Olin Foundation
| |
Minnesota Mining & Mfg Co (3M) Mutual Benefit Life Ins. Co. of NJ
| |
American Express Co. AT & T
| |
Hewlett Packard Pacific Northwestern Bell Co.
| |
FMC Corporation BeachviLime Ltd.
| |
Utah Intl' Inc. Eveleth Expansion Company
| |
Exxon Corporation Fidelity Union Bancorporation
| |
International Nickel/Canada Cypress Woods Corporation
| |
Federated Capital Corporation Intl' Minerals & Chemical Corp.
| |
Equitable Life Assurance Soc U.S. Burlington Industries
| |
Federated Dept Stores Wachovia Corporation
| |
General Electric Jefferson Pilot Corporation
| |
Scott Paper Co. R. J. Reynolds Industries Inc.
| |
American Petroleum Institute United States Steel Corp.
| |
Richardson Merril Inc. Metropolitan Life Insurance Co.
| |
May Department Stores Co. Norton-Simon Inc.
| |
Sperry Rand Corporation Stone-Webster Inc.
| |
San Salvador Development Company Standard Oil of Indiana
PeteWas
Why is the Federal Reserve Deregulating Banks by Removing the Consumer Protections in the Truth in Lending Act from Application to Bank Overdraft Plans at the Same Time that Congress is Proposing Strengthening Consumer Protections in Bank Overdraft Plans?
On Thursday November 12, 2009 the Board of Governors of the Federal Reserve adopted a new regulation and issued a new Official Staff Commentary relating to bank overdraft fees. The regulation is about 93 pages in length and has the appearance of a consumer friendly regulation that has a provision that as of July 1, 2010 consumers must affirmatively opt-in to overdraft protection plans. However, I believe that even this attempted consumer friendly provision does not go far enough in that it does not apply until July 1, 2010.
Given the recent history of the banks in raising credit card interest rates before the effective date of the new federal law providing enhanced consumer protections for credit card consumers, one can only be suspect that banks will use this time before the July 1, 2010 effective date to continue to harm the interests of consumers. The regulation does not provide substantive protections to consumers, but rather to the contrary contains a provision buried in the fine print that deregulates bank overdraft protection plans by removing the Truth in Lending Act (TILA) from application to overdraft plans.
This untimely deregulation of banks with respect to overdraft plans is arguably the most damaging provision of the regulation and eviscerates any vestiges of consumer protections for those who have already been affected and for those who will be affected in the future by bank overdraft plans. Not only are there no safeguards for consumers, the interpretation by the Federal Reserve that makes TILA inapplicable enables banks to continue to perpetuate unfair practices with impunity.
Attorney Peter N. Wasylyk, 1307 Chalkstone Avenue, Providence, RI 02908
Tel: 401-831-7730
Fax: 401-861-6064
E-Mail: pnwlaw@aol.com
JasonPacifico
Well, in regard to your perspective, it's really too narrow for you, I think your political perspective, creative informed ideas, and narrative of the "issues" should be on abolishing the Fed (Ron Paul had a bill in 2007-2008 to abolish the FED, a similar bill may have a chance in 2010). But unlike Ron Paul, your more fully empathetic perspective and as a author and writer could inspire the "change" the country needs.
I was contemplating that perhaps a proposal on a new Central Bank where instead of the 12 Regional Banks being owned by JP Morgan Chase, Citigroup (formerly Chase National, First National Bank and National City Bank ) and the international Banking Consortium of Banks (Rothschild Banks of London and Berlin, Lazard Brothers Bank of Paris, Israel Moses Sieff Banks of Italy, Warburg Bank of Hamburg, Germany and Amsterdam, Kuhn Loeb Bank of New York, Goldman Sachs Bank of New York) would be abolished and replace in a new central (Constitutional) bank.
The new Central Bank, for example, rather than a consortium of banks would be owned by 260 million Americans as shareholders, who perhaps would get a share from the currency, of let's say, $6000. a year. Low actuary mortgages for primary homes of 1 percent (where 12 percent of the monthly payments, for example, could be an investment in a mutual fund in income back to the homeowner) A banking multiplier, as in the fractional reserve banking, on job creation and middle-class wages up to $90,000 a year (30 to 1 multiplier on employers putting funds for wages into a payroll account of $3000--which would create "out of a realization"-- the $90,000 wage, and not "out of thin air" for debt like the 1.8 trillion from TARP (of 23 trillion created for TARP,TALP, PPIP, and Guarantees).
A formula for new business start-ups of 12 to 1 multiplier, for example, on every $100,000 for business investment, it would be multiplied to 1.2 million with employees as shareholders for new factories, business, etc.
It would be nice to see someone like you put together in an article, a comprehensive proposal on a new Central Bank, the article I'm sure would turn out to be a book
anolmec
Lets not let the fact escape that Ben was enabled by a PUSSIFIED CONGRESS AND SENATE, not to mention a puppet president (past and present).While I agree that heli-Ben needs to be relegated to a cashier position of a convenience store, to make him out as the scape goat is to remain ignorant of the scale of corruption which exist in DC. The "masses of unwashed" need to replace a system with something other than what is currently being hoisted on them. Hopefully they do so before the rest of the world does it for them.
cristi
Nomi Prins provides strong leadership and logic in this subject: Affirming Bernanke would be like telling everyone aspiring for that office, they can do anything but murder, and it is okay - we will praise thee. ... "A confirmation of Bernanke would affirm that the Fed can do whatever it wants, no matter what the cost, as long as we live under the ethos that making bad decisions is better than making worse ones."
The whole idea of Fed reserve spending that kind of money whereas, in years before it did not, and then, keeping secret the corporations it does business with, is next to murder, the worst thing a financial regulator can do. It smells of more rotten fish, when we hear people like the President and Secretary of Treasury, echoing the need to have state secrets in who our financial partners are in the world economy.
Here is an oxymoron: You be a financial regulator, and give out money that you do not account for.
Here is a worse oxymoron: You be a financial regulator, and give out money that you do not answer to anyone about, even when a high district court orders you to make disclosure in a reasonable time frame.
Thank you.
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