January, 28 2010, 04:30pm EDT
For Immediate Release
Contact:
Alan Barber, (202) 293-5380 x115
Statement on Ben Bernanke's Re-Approval
WASHINGTON
The following statement by economist and CEPR co-director Dean Baker was released following Ben Bernanke's confirmation hearing:
The Senate approval of a second term for Ben Bernanke as Fed chairman
sends exactly the wrong message to the Federal Reserve Board and the
country. First and foremost, Mr. Bernanke failed in his job about as
spectacularly as is humanly possible. He sat back and watched the
housing bubble grow to a level where its collapse jeopardized the
stability of the U.S. economy.
The financial crisis and the economic downturn of the last two years
were entirely predictable outcomes of this collapse. Yet, Mr. Bernanke
insisted that there was no problem with the housing market, first in
his capacity as a governor of the Federal Reserve Board since 2002 and
then in his capacity as chairman since January of 2006.
Attacking the bubble would have been politically difficult since it
required going after a source of enormous profit for the financial
industry. Nonetheless, a responsible Fed chair would have used all of
the Fed's tools and power to prevent the bubble from expanding to such
dangerous levels, even knowing that he would face fierce opposition
from the financial industry.
Bernanke opted not to go this route, and tens of millions of people are
now facing the consequences in the form of unemployment, foreclosures
and/or lost savings. If he can get reappointed in spite of this lapse
in responsibility, it is difficult to see why any future Fed chair
would ever confront the financial industry under similar circumstances.
In addition to sending the wrong message with Bernanke's reappointment,
there were also several aspects to the debate around his reappointment
that set a discouraging precedent. First, Bernanke's supporters
repeatedly referred to the drop in the stock market in response to
concerns that his approval could be blocked as a reason for approving
Bernanke.
No serious economist would advocate setting policy around fluctuations
in the stock market. Economists from across the political spectrum
argue that policy must be focused on getting the economic fundamentals
right. It is unfortunate that Mr. Bernanke's supporters felt that they
had to use such a fallacious argument to advance their agenda and even
more unfortunate that this argument was apparently effective.
The second troubling aspect to the debate was the effective creation of
a false counter-factual. Many of Bernanke's supporters praised his
policies for turning around the economy quicker than had been
predicted. It is easy to show that this is not true. The January 2009
projections from the Congressional Budget Office, the Obama
administration, and most private forecasters proved to be overly
optimistic. The economy has done worse, not better than expected. The
claim that Bernanke's effective management in the post-Lehman era led
to a quick turnaround is a pure invention by his supporters.
Finally, it was disturbing to see that President Obama was apparently
able to get senators who opposed Bernanke to vote for cloture, when he
has apparently been unable to accomplish a similar feat with health
care and many other pieces of legislation. This suggests a prioritizing
of Bernanke's reappointment that is not in any way justified by his
importance to the economy or the country.
Even with all the pressure bought to bear, Bernanke was approved by the
smallest margin for any Fed chairman in history. There was strong
opposition from members of both parties. It would be encouraging if
Bernanke's opponents could press forward with the demand for a full
audit of the Fed. This would be an important step towards having a Fed
that is not exclusively accountable to the financial industry.
The Center for Economic and Policy Research (CEPR) was established in 1999 to promote democratic debate on the most important economic and social issues that affect people's lives. In order for citizens to effectively exercise their voices in a democracy, they should be informed about the problems and choices that they face. CEPR is committed to presenting issues in an accurate and understandable manner, so that the public is better prepared to choose among the various policy options.
(202) 293-5380LATEST NEWS
US Increases Dominance as World's Top Arms Exporter
"The impacts of the global arms trade aren't just about the volume of weapons delivered," said one expert, citing "a few examples of how U.S. arms deliveries can make the world a more dangerous place."
Mar 13, 2023
A Sweden-based research institute published a report Monday showing that the United States accounted for 40% of the world's weapons exports in the years 2018-22, selling armaments to more than 100 countries while increasing its dominance of the global arms trade.
The report—entitled Trends in International Arms Transfers, 2022—was published by the Stockholm International Peace Research Institute (SIPRI) and listed the United States, Russia, France, China, and Germany as the world's top five arms exporters from 2018-22. The five nations accounted for 76% of worldwide weapons exports during that period.
The five biggest arms importers over those five years were India, Saudi Arabia, Qatar, Australia, and China.
"The United States has much room for improvement."
The United States saw a 14% increase in arms exports over the previous five-year period analyzed by SIPRI. U.S. arms were delivered to 103 nations from 2018-22, with 41% going to the Middle East.
"Even as arms transfers have declined globally, those to Europe have risen sharply due to the tensions between Russia and most other European states," Pieter Wezeman, senior researcher at the SIPRI Arms Transfers Program, said in a statement. "Following Russia's invasion of Ukraine, European states want to import more arms, faster. Strategic competition also continues elsewhere: Arms imports to East Asia have increased and those to the Middle East remain at a high level."
According to the report, Russia's invasion of Ukraine early last year "had only a limited impact on the total volume of arms transfers in 2018–22, but Ukraine did become a major importer of arms in 2022."
Ukraine was the 14th-largest arms importer from 2018-22 and the third-biggest last year.
Wiliam Hartung, a senior research fellow at the Washington, D.C.-based Quincy Institute for Responsible Statecraft, wrote Monday that "the impacts of the global arms trade aren't just about the volume of weapons delivered. The question is how those weapons are likely to be used, and the extent to which they promote stability versus fueling conflict or propping up repressive regimes with abysmal human rights records."
"On this score the United States has much room for improvement," he continued. "Transfers to Saudi Arabia and the United Arab Emirates for use at the peak of their brutal war in Yemen, and sales to major human rights violators from the Philippines, Egypt, and Nigeria are a few examples of how U.S. arms deliveries can make the world a more dangerous place."
"There are a number of promising steps that Congress can take—as articulated by a new coalition, the Arms Sales Accountability Project—that would mandate closer scrutiny of U.S. sales," Hartung asserted.
"There is also some useful language in the Biden administration's new arms transfer policy directive, that, if implemented, would significantly rein in the most egregious sales," he added. "Only time will tell if U.S. policy can be moved towards one based on arms sales restraint rather than arms sales promotion."
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Mar 13, 2023
While welcoming a federal order that Norfolk Southern test for dioxins near a derailed train that was carrying hazardous materials through East Palestine, Ohio, over 100 groups on Monday shared "recommendations on how this testing should be conducted to improve transparency, rebuild public trust, and comprehensively address possible releases."
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River Valley Organizing (RVO), Toxic-Free Future, and other organizations signed the letter sent on Monday to agency leaders including EPA Administrator Michael Regan—which states that "to date, Norfolk Southern has done an extremely poor job of building trust with the community of East Palestine and other communities impacted by the disaster."
"We strongly recommend the U.S. EPA itself conduct the dioxin sampling or hire its own consultants to conduct the testing."
"To ensure this testing is adequately conducted, and to rebuild public trust, we strongly recommend the U.S. EPA itself conduct the dioxin sampling or hire its own consultants to conduct the testing," the letter continues. "Norfolk Southern should not be in charge of the dioxin sampling. This testing must be paid for by the responsible parties, not taxpayers."
Along with laying out what the groups believe should be detailed in the dioxin sampling plan—including goals, locations, detection limits, procedures, and laboratories used—the letter calls for allowing residents to weigh in before testing begins.
"All sampling data and test results should be made available to the public for review in a transparent and easily accessible format," the organizations argued. "This information must be accessible for review, given the need for results to be meaningful to impacted communities as well as to build trust through transparent action."
While the EPA has said that its own "monitoring for indicator chemicals has suggested a low probability" that dioxins were released as a result of the February 3 derailment and subsequent "controlled burn" of vinyl chloride, as the letter says:
Responders reportedly punctured and burned more than 115,000 gallons of vinyl chloride in uncontrolled conditions for numerous days, making it likely that dioxins and related chlorinated substances were formed and released into the communities surrounding the disaster site. Four train cars of polyvinyl chloride plastic also burned, also likely forming dioxins. There have been elevated levels of dioxins released in other major accidents involving chlorinated chemicals—from the 2004 explosion at the PVC plant in Illiopolis, Illinois, to the 1997 Plastimet PVC recycling fire in Ontario, to the 2001 World Trade Center attacks.
The organizations also recommended that "the EPA work with other agencies to provide medical monitoring for impacted
communities, especially East Palestine and those in the combustion plume, that desire it."
"Communities surrounding and downwind of the derailment have a right to know whether the fire resulted in elevated concentrations of dioxins. The testing must be transparent and comprehensive," the letter asserts. "This would help demonstrate EPA's commitment to comprehensively responding to this disaster, rebuilding trust with East Palestine and other impacted communities, and advancing environmental justice."
Leaders and experts at groups that signed the letter echoed its key messages in a statement Monday—including RVO co-executive director Amanda Kiger, who declared that "this community deserves to know what potential toxic chemicals they will have to live with for years to come due to Norfolk Southern's greed."
Just like per- and polyfluoroalkyl substances (PFAS), often called forever chemicals, "dioxins are toxic even at very low levels of exposure," noted Mike Schade, director of Mind the Store, a program of Toxic-Free Future.
Stephen Lester, science director of the Center for Health, Environment & Justice, highlighted that "exposure to dioxins can cause cancer, reproductive damage, developmental problems, immune effects, skin lesions, and other adverse effects."
"It's important for the residents of East Palestine that accurate and transparent testing for dioxin be done at the lowest levels possible, so that the residents can begin to understand the risks they face and can make informed decisions to protect their health," Lester said.
Others took aim at Norfolk Southern, which since the derailment has faced intense scrutiny for its safety culture and practices.
Given that "Norfolk Southern has obvious financial conflicts of interest in the outcomes of all environmental testing and public health evaluations," Dr. Ted Schettler, science director at the Science and Environmental Health Network, stressed the need for "rigorous oversight of the U.S. EPA, including strict quality control measures and split-sample testing."
Judith Enck, a former U.S. EPA regional administrator who is now president of Beyond Plastics, said that "it is unfortunate that the EPA took a month to decide to test for dioxins, and then rather than doing it itself, is having Norfolk Southern consultants to do the actual testing."
"The testing plan is too limited and should be revised to require some testing inside people's homes, at schools, and air filters in schools and buildings and cars should be tested, not just soil," she added. "Rain has likely driven contaminants toward groundwater and that water should be tested over a period of months and year[s]."
Enck's comments came after she wrote in a New York Times opinion piece last week that the EPA should have "ordered comprehensive testing the very day of the burn" and "told residents, especially pregnant women and families with young children, not to return home until it was safe to do so."
"Instead, it timidly stood back, leaving local authorities, corporate interests, and rumors to fill the void," she charged. "In lieu of a comprehensive plan, the EPA appears to be playing a game of crisis whack-a-mole, waiting and then responding to the news cycle. This is no way to safeguard our communities."
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After he had received more than $1 million as a Signature board member, the architect of the Dodd-Frank banking regulations minimized the risks of weakening rules he helped enact post-2008 financial crisis.
Mar 13, 2023
Barney Frank, a former House Democrat from Massachusetts, has been the subject of criticism since federal regulators took over Signature Bank on Sunday.
That's because Frank, architect of the Dodd-Frank banking regulations implemented in the aftermath of the 2008 financial crisis, played a key role in whitewashing the bipartisan effort to weaken those rules in 2018—after he had received more than $1 million while serving on Signature's board following his departure from Congress.
Since federal regulators seized Signature's assets on Sunday—two days after they intervened to protect depositors amid the collapse of Silicon Valley Bank (SVB)—progressive critics have been quick to blame a deregulatory measure approved five years ago by the then-Republican-controlled Congress for engendering two of the three largest bank failures in U.S. history.
The GOP, however, wasn't alone in supporting Sen. Mike Crapo's (R-Idaho) Economic Growth, Regulatory Relief, and Consumer Protection Act. As Sen. Elizabeth Warren (D-Mass.), a trenchant critic of the legislation, observed when it was moving through Congress, several Democrats—including Sens. Mark Warner (Va.), Joe Manchin (W.Va.), and Jon Tester (Mont.)—were integral to its passage.
To justify their decision, many of them pointed to Frank. The originator of the Dodd-Frank Wall Street Reform and Consumer Protection Act used his cachet as a presumed banking expert to legitimize a rollback of the very framework he helped enact in 2010 as chair of the House Financial Services Committee. But the ex-lawmaker wasn't merely an uninterested bystander. In 2015, he joined the board of directors at Signature, a crypto-friendly bank that was poised to benefit from less stringent oversight.
Frank said Crapo's Economic Growth, Regulatory Relief, and Consumer Protection Act "would not help the biggest Wall Street banks and denied it would increase the risks of another financial crisis," The Washington Post reported when then-President Donald Trump signed the bill into law in May 2018. "Some Democrats leaned heavily on those words as they pushed back against the plan's liberal critics."
However, the newspaper noted, "proponents of the law rarely, if ever, mentioned that Frank is not just the author of the 2010 law, but also sits on the board of New York-based Signature Bank."
In the wake of Signature's collapse on Sunday night, Frank's role in downplaying the risks of deregulation—while being paid by a bank that stood to gain from it—has received fresh light.
As the Post reported in May 2018: "Dodd-Frank imposed additional regulatory safeguards on banks with more than $50 billion in assets, but the rollback that passed this week, among other things, raises that threshold to $250 billion. Signature Bank has more than $40 billion in assets and can now grow significantly without automatically facing additional regulation."
But the bank's growth over the past half-decade came to a screeching halt over the weekend when its customers, alarmed by the failure of SVB, quickly withdrew $10 billion.
"Frank acknowledged that Signature stood to benefit, but he said his role on the bank's board did not influence his thinking," the Post reported five years ago. "Frank said his position on the threshold predates his compensation from the financial sector."
As Politicoreported on Monday, Frank disputes that Trump-era deregulation "had anything to do with" Signature's failure, even though it weakened oversight of "mid-size and regional banks like his own."
"I don't think that had any impact," Frank told the outlet. "They hadn't stopped examining banks."
Frank went so far as to tellCNBC that there was "no real objective reason" that Signature had to enter federal receivership.
"I think part of what happened was that regulators wanted to send a very strong anti-crypto message," Frank argued. "We became the poster boy because there was no insolvency based on the fundamentals."
Warren, by contrast, has focused her ire directly on the deregulatory moves minimized by Frank.
"Had Congress and the Federal Reserve not rolled back the stricter oversight, SVB and Signature would have been subject to stronger liquidity and capital requirements to withstand financial shocks," Warren wrote Monday in a New York Times opinion piece.
"They would have been required to conduct regular stress tests to expose their vulnerabilities and shore up their businesses," the lawmaker continued. "But because those requirements were repealed, when an old-fashioned bank run hit SVB, the bank couldn't withstand the pressure—and Signature's collapse was close behind."
"These bank failures were entirely avoidable if Congress and the Fed had done their jobs and kept strong banking regulations in place since 2018," she added. "SVB and Signature are gone, and now Washington must act quickly to prevent the next crisis."
Like Warren, Independent Sen. Bernie Sanders of Vermont has called for fully repealing "the disastrous 2018 bank deregulation law."
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