Bernanke Stays But So Do Challenges
SCOTT SIMON, host:
Ben Bernanke got a vote of confidence this week when President Obama offered him a second term as chairman of the Federal Reserve. New York Times business columnist Joe Nocera joins now from the Radio Foundation (unintelligible). Joe, thanks very much for being with us.
Mr. JOE NOCERA (New York Times): Oh, thanks for having me, Scott.
SIMON: And anticipating confirmation, before we look ahead to the second term, you want to give us a grade for Mr. Bernanke's first one?
Mr. NOCERA: Well, you can split it into two parts, really. In the time leading up to the crisis, before the crisis erupted, he was almost Greenspanian in his unwillingness to look at things straight in the eye and his insistence that all would be well. And you know, the subprime thing would be contained and the American economy was healthy. And it's a little surprising because both he and Paulson had had staffers kind of preparing for worst case scenarios, thinking that something might happen.
But - so he doesn't get a particularly good grade for that. And that's what his critics really harp on, that he wasn't prepared. But once the crisis hit, his grounding in the studies of the Great Depression caused him to be incredibly creative and forceful in coming up with solutions that kept the system from crumbling. And in that part of it, he deserves an A+, really. Even when the politicians were - when Congress was in a lather about this or that, he just kept moving forward, creating facility - I mean, a lot of the stuff the Fed, that you don't even see, it's creating these facilities that allow for commercial paper lending and so on, but they were really important and he really did a great job.
SIMON: I have read some, several analyses over the past few weeks that have suggested that maybe we underestimated the achievement of a lot of people of different political philosophies last fall in averting catastrophe.
Mr. NOCERA: There - yes. There is a lot of revisionism going on, particularly about the role of Hank Paulson. There's not much revisionism about Bernanke, because it generally is viewed, even at the time, that he was the one person with his finger in the dike. Oh, whoops. Ted Koppel used that just a minute ago.
(Soundbite of laughter)
SIMON: Oh, yeah. You're a real original analyst, Joe. Go ahead.
(Soundbite of laughter)
Mr. NOCERA: But Paulson was so roundly criticized for so much of what he did. And it is true, it felt like he was lurching from thing to thing. But in the end, with the exception of letting Lehman go bankrupt, it does appear that the moves that the Treasury made, as well as the Fed, have turned out to be more or less the right moves.
SIMON: There's front page analysis in that other newspaper, the Wall Street Journal, this morning, though, that suggests that there's two economies. There are the big corporations that are - that have a lot of credit at the moment and then small businesses who still find credit difficult.
Mr. NOCERA: Well, the truth of the matter is, you know, everybody is finding credit somewhat difficult. It's easier for a big corporation 'cause they have more muscle and they're obviously not going to go out of business anytime soon.
But it has been tremendously difficult for small businesses to get credit, even ones that have been profitable for years. And you know, if you need loans, they're tough to get. Big banks have arbitrarily and unilaterally, you know, changed their standards, limited lines of credit, made credit much more difficult. And they're doing it because they're scared. That's one of the consequences of the crisis of a year ago.
But the effect on American business has been really quite profound and really quite demoralizing.
SIMON: Forty-five seconds left. Cash for Clunkers a success?
Mr. NOCERA: A wild success. It's incredible...
(Soundbite of laughter)
Mr. NOCERA: ...how you can stimulate the economy if you give people 4,500 bucks, or at least a discount on a new car.
I guess that what worries me about the Cash of Clunkers program is that the government is selling cars the same way the industry always did, you know, by offering cash incentives. And the question really is, as it has been for some time: will Americans ever buy American cars without an incentive, just because it's a good car? And the problem with the Cash for Clunkers Program is it didn't answer, in the least.
SIMON: Joe Nocera, New York Times columnist and our man on finance and economics, thanks so much for being with us.
Mr. NOCERA: Thanks for having me, Scott.
SIMON: You're listening to NPR News.
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