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Who Should Run the Fed?
If you weren't convinced before that Ben Bernanke should be replaced as Chairman of the Federal Reserve you might be now. Wall Street's Humble Servant--Secretary Timothy Geithner--has warned that if Bernanke is replaced, "I think the markets would view that as a very troubling thing to the economy as a whole."
Geithner and Bernanke's subservience to "the markets" at the expense of the public interest is key to why there is growing opposition to Bernanke serving a second term. His Senate reconfirmation vote was already delayed once, and according to The Hill, "no less than 13 Democratic and Republican senators" have now announced that they will vote against him----including Senators Bernie Sanders, Russ Feingold, Byron Dorgan, Barbara Boxer, and Jeff Merkley. Many more are on the fence.
No one has been more vocal in his opposition than Senator Sanders who placed a hold on Bernanke's nomination. In a statement released on Sunday, he said: "The issue for Democrats is whether they will allow Republicans to pretend to be the populist, anti-Wall Street party, or whether they will have the courage to stand up to Wall Street and bring in a Fed chairman who will represent the needs of working families rather than huge financial institutions… Ben Bernanke was the top economic advisor to George W. Bush. He was in lockstep agreement with Alan Greenspan, who has now endorsed him. These are the people who let Wall Street run amok."
I also spoke with University of Maryland Law Professor Michael Greenberger for his take on Bernanke. Greenberger served as the Director of the Division of Trading and Markets at the Commodity Futures Trading Commission (CFTC) back when Chair Brooksley Born and her colleagues were calling for regulation of derivatives.
"Bernanke is constantly playing shell games," Greenberger said. "Now he's trying to get out of the criticism for having too lax a monetary policy by saying, ‘It wasn't monetary policy it was lax regulation.' But Bernanke was vigorously fighting regulation of hedge funds, for over-the-counter derivatives, up to the point of the meltdown. And, in fact, one of the biggest sponsors of this current swap exemption is the Fed--it's a $50 trillion exemption. So when he's attacked for monetary policy he says, ‘Oh, it's regulation. But he led the charge for deregulation and fighting re-regulation."
It's absurd to think that there aren't plenty of other highly qualified candidates who could run the Fed. It's equally absurd to think we shouldn't hire any of them because of temperamental markets. Worship of "the markets" is what got us in this mess to begin with.
Below are some of the names being floated by various Democratic, progressive and labor sources--in no particular order. They are an impressive group--worth passing along to your Senators with a message that Bernanke simply isn't the right person for the job in these times.
Elizabeth Warren: Harvard law professor, chair of the Bank Bailout oversight panel. A Consumer Financial Protection Agency to protect consumers against predatory lenders and other toxic financial products was her idea.
Paul Volker: Chairman of the Federal Reserve under Carter and Reagan from 1979-1987. Chairman of Obama's Economic Recovery Advisory Board. Has been Chair fighting to regulate the scale and scope of TBTF financial firms while Geithner, Summers, and Bernanke have taken a passive approach.
Brooksley Born: Chair of the Commodity Futures Trading Commission under Clinton. Fought for regulation of derivatives but was ignored, setting stage for the economic meltdown. Born is currently a member of the Financial Crisis Inquiry Commission.
Joseph Stiglitz: Chairman of President Clinton's Council of Economic Advisers from 1995-1997, former Chief Economist of the World Bank, 2001 recipient of the Nobel Prize in Economics.
Nouriel Roubini: professor of economics at the Stern School of Business, New York University and chairman of Roubini Global Economics. In September 2006 he warned the IMF: "The United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence, and, ultimately, a deep recession." He also foresaw "homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt." Recently named one of the 100 most influential people in the world by Time magazine.
Warren Buffett: in March of 2003, Buffett called derivatives "financial weapons of mass destruction" that could pose "a mega-catastrophic" risk to the economy.
Simon Johnson: former chief economist of the International Monetary Fund and currently an economics professor at MIT. Writes the invaluable Baseline Scenario.
Robert Reich: served as Clinton's Secretary of Labor. Currently Professor of Public Policy at the University of California, Berkeley.
Jared Bernstein: Chief Economist and Economic Policy Adviser for Vice President Biden. Worked as senior economist for the Economic Policy Institute.
William Black: an Associate Professor of Economics and Law at the University of Missouri–Kansas City. Black was the litigation director for the Federal Home Loan Banks during the Savings and Loan crisis. He served as Senior Deputy Chief Counsel, Office of Thrift Supervision.
Nomi Prins: Senior Fellow at Demos and author of It Takes a Pillage: Behind the Bonuses, Bailouts, and Backroom Deals from Washington to Wall Street. Former managing director at Goldman Sachs and Bear Stearns.
Paul Krugman: the New York Times columnist is a Professor of Economics at Princeton University and a Centenary Professor at the London School of Economics. In 2008, he won the Nobel Prize in Economics.
Dean Baker: co-Director of the Center for Economic and Policy Research. He worked as a senior economist at the Economic Policy Institute. He has also worked as a consultant for the World Bank, and for the Joint Economic Committee of the U.S. Congress.
Lawrence Mishel: President of the Economic Policy Institute.