It was a vivid power struggle at Ben Bernanke’s Senate renomination hearing today. Bernanke resisted calls to audit the Federal Reserve or cut back its authority in any way, while a few Congressman gave him some sharp jabs.
“To be very, very clear, I in no way object to — in fact I welcome — transparency about the Fed’s activities and the Fed’s financial position, both to the public and to the Congress,” Mr. Bernanke said at the hearing Thursday morning. “I am, however, concerned with the auditing of monetary policy.”
“My fear is that if we take what could be an unpopular step, Congress will order an audit, which would be a way of applying pressure, or perceived as a way of applying pressure, to our policy decisions.”
The consensus seemed to be that Bernanke would get to serve another term, but will it be as head of the same entity? Congress may well strip the Fed of some of its authority. Several congressman accused the Fed of doing a horrible job as a regulatory body.
A sample of comments from the Wall Street Journal:
“Why should I give an institution that failed … that type of exclusive authority?” (Connecticut Democrat Christopher) Dodd asked, referring to proposals to broaden the Fed’s role as a financial regulator…
“You are the definition of a moral hazard,” said Sen. Jim Bunning (R, Ky.), a long-time Fed critic. “I will do everything I can to stop your nomination and drag out this process as long as I can.”
While many people think Bernanke did a laudable job in the triage aspect of the economic breakdown, they blame him for causing the wreckage in the first place. He was asked if he sees any bubbles in the economy now:
“We do not see, at this point, any extreme misevaluation of assets in the United States.”
Where have I read that before? Oh yeah, in the Washington Post, October 27, 2005:
Ben S. Bernanke does not think the national housing boom is a bubble that is about to burst, he indicated to Congress last week, just a few days before President Bush nominated him to become the next chairman of the Federal Reserve.
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