Bernanke, victim of populism or incompetent?

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Once viewed as the rock at the center of the government's response to the financial crisis, Bernanke has become a target for mounting anti-Wall Street fervor with two Democratic senators registering their opposition Friday and other support softening.

Top Senate Democrats scrambled for votes to confirm Bernanke less than a week after he seemed certain to earn a second term when his first expires Jan. 31. Although Democrats and Republicans alike mostly praise Bernanke for aggressive steps to combat the recession, he is increasingly blamed for failing to rein in Wall Street excesses that led to the crisis and tarred by his role as engineer of the profoundly unpopular bailout for financial firms.

Washington Post

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Type: Discussion • Score: 8 • Views: 2,062 • Replies: 25

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@dyslexia,

I wish I knew enough about banking and populism to answer your title. I remain convinced that Volker could have done much better than Paulson, but that isn't your question.

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the charge is that his priorities are wrong, in which case he has BOTH offended the populous and been incompetent.

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@roger,

roger wrote:

I wish I knew enough about banking and populism to answer your title. I remain convinced that Volker could have done much better than Paulson, but that isn't your question.

So Roger, I guess the a2k pundits of economics expertise don't seem to have any thoughts about Bernanke. That pretty much leaves it up to idiots like you and me to tackle such non-issues as The Fed and Bernanke's impact on Wall Street and the American/World economy. So it goes.

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I am too ignorant to formulate a reasonable answer.

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@dyslexia,

If Bernanke is a victim of anything, it's the Bush administration.

I had dinner recently with a friend who is the retired chair of the economics department of a local university. Someone at the table made a crack about the bailout, and my friend stopped him dead in his tracks, explaining in chilling detail, just how close we were to total meltdown of our entire financial system.

The crux of it being, that we were about two to three days away from a worldwide banking collapse.

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Quote:

Volcker, who commands respect on Wall Street and among both Democrats and Republicans, is seeing a resurgence of his influence after venting frustrations to friends that he had been left out in the cold when it came to economic decision-making at the White House.

The 82-year-old Volcker was one of Obama's most influential advisers during his 2008 presidential campaign and now chairs a panel of outside economic advisers to the White House.

He had rarely been seen in Washington since the start of the Obama administration and made no secret of a difference in opinion with the White House over how to deal with the problem of "too big to fail" financial firms.

Volcker's fear, shared by some other economists, is that newly consolidated U.S. banks might engage in reckless behavior on the belief that the government would never allow them to fail because of their sheer size. Such risky activity could leave the financial system vulnerable to another crisis, these economists say.

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@dyslexia,

I support Bernanke being thrown out when his term expires.

Him, every congressman who voted for the stimulus and TARP, Obama for the same reasons.....hell, I'm probably anti-incumbant for the rest of my life.

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@maporsche,

Quote:

Him, every congressman who didn't vote for the stimulus or TARP, Obama for the same reasons.....hell, I'm probably anti-incumbant for the rest of my life.

I bet if the stimulus and TARP hadn't passed, you would still be pissed.

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@LionTamerX,

Quote:

The crux of it being, that we were about two to three days away from a worldwide banking collapse

that in no way changes the fact that this crew did not work for the right people. They we supposed to be working for the people who paid them, and who paid for the salvage operation, the American citizen. Instead they thought that they were working for Wall Street and the global financial system. The American people paid for the banking system, and after paying for it we should have owned it, the banks should have been nationalized.

Instead we did the bailouts, and once saved the banks the private owners and the employees are now taking all of the wealth created by the recovery of the banks. It is Heads the bankers win with profits, tails the taxpayers lose by taking the loses. This is not capitalism, this is bullshit which incentivizes the bankers taking huge gambles with risky bets, sometimes which go bad. What do they care, they are too big to fail, it is not their money on the line.

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@ebrown p,

Yeah maybe, but not about this.

You may remember, I voted for Obama thinking that he'd actually fix our financial problems.

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@hawkeye10,

Quote:

Quote:

The crux of it being, that we were about two to three days away from a worldwide banking collapse

that in no way changes the fact that this crew did not work for the right people. They we supposed to be working for the people who paid them, and who paid for the salvage operation, the American citizen. Instead they thought that they were working for Wall Street and the global financial system. The American people paid for the banking system, and after paying for it we should have owned it, the banks should have been nationalized.

Instead we did the bailouts, and once saved the banks the private owners and the employees are now taking all of the wealth created by the recovery of the banks. It is Heads the bankers win with profits, tails the taxpayers lose by taking the loses. This is not capitalism, this is bullshit which incentivizes the bankers taking huge gambles with risky bets, sometimes which go bad. What do they care, they are too big to fail, it is not their money on the line.

If the banks all failed, who would have actually borne the brunt of the suffering ?

Think about it...

1 Reply

@LionTamerX,

Quote:

If the banks all failed, who would have actually borne the brunt of the suffering

I never suggested that the banks should have been allowed to fail, that the system should have been allowed to collapse. I said that the people who paid the bills, who paid for the assets, should have owned the assets. The banks should have been nationalized, their ownership should have changed, the private owners should have walked away with nothing as justice for their poor ownership performance.

If we owned the banks there would be none of the obscene bonuses currently be paid to employees, and we would have already dealt with the housing market problems by getting in front of it by rewriting the majority of mortgages, thus ending most of the foreclosure problem so that the housing market could begin to recover. We would also have already been mostly done taking the losses that the banks need to take by writting down all sorts of loans, so that the banks were fit and ready to lend and ready to be returned to the private sector.

We did not do the correct thing, and so we are years if not a decade away from fixing the problems that need to be fixed.

1 Reply

@ebrown p,

ebrown p wrote:

Quote:
Him, every congressman who didn't vote for the stimulus or TARP, Obama for the same reasons.....hell, I'm probably anti-incumbant for the rest of my life.

I bet if the stimulus and TARP hadn't passed, you would still be pissed.

Which explains why hindsight is not 20/20. We will never know the results of the path not taken.

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@hawkeye10,

Quote:

The banks should have been nationalized, their ownership should have changed, the private owners should have walked away with nothing as justice for their poor ownership performance.

So, what you're saying is you favor a communist style system. I have to disagree with you, but to each his own, I suppose.

1 Reply

@LionTamerX,

Quote:

So, what you're saying is you favor a communist style system. I have to disagree with you, but to each his own, I suppose

nicely ignoring that I said that once the banks had been fixed, and once the previous owners (the ones who fucked our entire economy) got their stakes rubbed out, the banks should get sold off to new private owners, hopefully the banks earning enough at sale to pay back the taxpayers for their investment, if not a profit as well. If they mess the banks up again then they would get rubbed out as well.

Capitalism, do it right, or else you get eliminated.

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@dyslexia,

dyslexia wrote:

Bernanke, victim of populism or incompetent?

Victim of populism, and in the wrong place at the wrong time.

The financial crises started because Greenspan, along with the four US presidents he served under, had made two big mistakes: (1) They failed to regulate the emerging shadow banking system. And (2) they removed too many of the New-Deal regulations that had stabilized the traditional banking system before Reagan. By doing so, they set up the system to crash, and allowed big investment banks to take the economy hostage if they failed.

Sure -- when investment banks did fail and did take the economy hostage, Bernanke chose to pay the ransom. Was that incompetent? Would the country be better off if he had put it through a second Great Depression instead? No and no. Bernanke was in a no-win situation through no fault of his own, and he opted for the alternative that sucked the least. Life can be like that.

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@LionTamerX,

LionTamerX wrote:

my friend stopped him dead in his tracks, explaining in chilling detail, just how close we were to total meltdown of our entire financial system.[...]The crux of it being, that we were about two to three days away from a worldwide banking collapse.

No kidding?! Your "information" is third-hand at best, and your opinion is baseless even according to your limited lights. Either you provide credible source with documented data or you go back to amply deserved silence.

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@dyslexia,

I spoke to Paul Volcker on several occasions recently and he seems to have signed up - other than what you just quoted, all of which is true, unlike the chicken-little-lions-quoted-previously - for drastic solutions for injecting new energy into our economy, starting with the abolition of corporation tax. That's as in setting it to ZERO. Hope he prevails.

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@High Seas,

Oh ya, you are such an insider that you have both the gist of the plan as well as the goal wrong. How about you go educate yourself??
http://online.wsj.com/article/SB125608089516097229.html

besides, it is not a final plan yet...they are still working on it.

1 Reply

Bernanke, victim of populism or incompetent?

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