When Wall Street is the Problem, Is Bernanke the Answer?

Memo to CNN: Consider
this as a theme for Black In America 3.

In his recent press conference,
after which President Obama would be called to task for lambasting the
police in Cambridge Mass for acting "stupidly"-a comment
he later withdrew-he also charged that Wall Street knew what
they were doing when they made predatory loans. No one called him on
that, not even Wall Street.

Here's what he said. "We
were on the verge of a complete financial meltdown. And the reason was
because Wall Street took extraordinary risks with other people's money.
They were peddling loans that they knew
could never be paid back."

If this is unfair, no one has
stepped up to the plate to deny it, certainly not the relentless right-wing
which fell on Obama like a ton of bricks for suggesting that a lone
policeman acted improperly by arresting scholar Skip Gates in his own
home.

If it was a smear, you would
expect an uproar from the Wall Street-Real Estate complex responsible
for millions of families losing their homes. After all, this is a mass
problem, not a mere incident. Also, a large proportion of those targeted
were people of color. Their lives have been handcuffed, not just their
wrists. If you are looking for a case of mass racial profiling, look
here. A lawsuit in Baltimore produced an internal memo from Wachovia
Bank in which loan officers called black customers "Mud People."

Sadly, the explainer in chief
did not elaborate, did not remind the country that Wall Street firms
made billions of dollars securitizing these loans, then turning them
into exotic products with misrepresented values. After financing rip-offs
of homebuyers, they ripped off investors by selling infected "bundles."

None of these con-artists have
been prosecuted; many have been rewarded.
According to economist James Kwak, for banks, "there
is no contradiction between fleecing customers and making lots of profits
(which is what makes you safe and sound). (a) Originate bad loans; (b)
pocket fees; (c) sell bad loans to an investment bank for distribution;
(d) repeat. What threatened to bring down banks was the fact that they
held on to too much of the risk of those loans, either on their balance
sheets or in their off-balance-sheet entities."

These assetless products had
no underlying value, and had to be written off leading to massive losses.
It was the implosion of these fraudulent "toxic" mortgages that
brought down the economy. The FBI cites "an epidemic" of criminality.

The Administration is not going
after the people who were "pedaling loans that they knew could never
be paid back." They are, instead, proposing a new consumer protection
agency to make sure that the slick salesmen who take advantage of a
widespread lack of financial literacy can no longer bamboozle the uninformed.

Everyone advocating responsible
lending wants new rules with teeth. They support an agency to safeguard
consumer rights. Who is against it: almost all the banks that
the government has bailed, and all the sleazebags who should be jailed.
They are mounting a slick campaign to kill the agency using a pricey
PR agency led by Jim Wilkinson, the Bush operative and former Paulson
aide who ran the propaganda war for the Iraq war. (You can't make
this up!)

And guess who has just joined
this backlash against reform? None other than Ben Bernanke, the overlord
of the Federal Reserve Bank, an organization, quiet as it's kept,
that is actually run by big banks and totally unaccountable to Congress
or the people.

The Fed had stood by and none
nothing to stop the subprime/subcrime wave, and nothing to stop the
millions of foreclosures for years. Now, the Fed is proposing to step
in, arguing that the new agency is not needed.

"I'll handle it," says
big Ben.

Can he? The New York Times
reported: "Consumer groups and lawmakers have blamed the Fed under
Mr. Bernanke's predecessor, Alan
Greenspan, for not
cracking down early on dubious mortgages practices. High-risk mortgages
fed the housing boom and led to its collapse.

Mr. Bernanke, who took over
the Fed in February 2006, eventually pushed through tougher rules,
though some said the changes came too late to ease the mortgage
crisis."

I love when the NY Times reports
"some said" without citing names or explaining that everyone
fighting for the rights of homeowers and predatory lending victims said
it, over and over again. The problem: no one was listening, including
Bernanke and the New York Times which admitted in a column in the Business
section that it were warned in 2000 and then ignored the problem for
seven years.

Baseline Scenario, a progressive
economic site said of the man insiders call "Helicopter Ben" because
of his affinity for spreading lucre from above to financial institutions
(whether they need it or not,) "Disregarding
his organization's disappointing track record in this regard, he claims
that the Fed can handle this issue perfectly well going forward. He
thus adds his voice to the cacophony of financial sector lobbyists favoring
the status quo.

At the same
time, Bernanke and the lobbyists talk about the importance of consumer
confidence for the recovery. But how can you expect anyone to have confidence
enough to spend and borrow when so many people have been so badly treated
by the financial sector in recent years?"

Economist Simon
Johnson adds, "The Fed, it seems, just wants to defend its turf."
Beyond that, it wants the banking industry to control the whole financial
reform process to make sure that all change is contained, co-opted and
controlled.

Ben Bernanke
is the running to become our economic czar. He is now mounting a campaign
for reappointment claiming he stopped a recession from turning into
a depression. That is debateable. Some like Eliot Spitzer who knows
where the bodies on Wall Street are buried says, "The
Fed is a Ponzi scheme, an inside job, it is outrageous, it is time for
congress to say enough of this."

The irony:
many in the Administration seem to want to give him and the Fed even
more power in the misguided belief he is operating in the public interest
up in that netherworld above politics.

Bernankeism
is now Leninism, Capitalist style, undemocratic centralism by another
name. He decides, we support. No checks, no balances. He is our
Monetary Mullah, a beneficent avatar of Korea's Kim and Iran's Supreme
Leader rolled into one. Genuflection, not accountability, is his order
of the day.

The Princeling
of Princeton wants us to think he knows best. As wannabe Congressional
overseers Ron Paul, on the right, Allen Grayson, in the center, and
Dennis Kucinich, on the left, have learned, questions to the bearded
one and the elite he reports to, invariably draw mealy-mouthed responses.
Demands for disclosure are not welcome and calls are not returned.

The Fed is
experiencing an unusually high call volume for the foreseeable future.
Don't try again.