Senators Take Swipes At Bernanke's Record
RENEE MONTAGNE, host:
While Dubai works through its financial problems, the U.S. Congress was the scene of a debate yesterday about America's economic turmoil. Senators questioned Federal Reserve Chairman Ben Bernanke about whether he deserves to keep his job. Parts of the hearing were heated. Other parts were humorous. Everyone in the room knew that Bernanke is virtually certain to keep his job. The real question, the one underlying all the pretense, was: who can we blame for the financial crisis, Ben Bernanke or Congress? Here from NPR's Planet Money team are Chana Joffe-Walt and Adam Davidson.
ADAM DAVIDSON: Hey, Chana, we should start with the most fun tape.
CHANA JOFFE-WALT: You mean where Senator Jim Bunning comes out and just says, Ben Bernanke, you should go back to Princeton.
DAVIDSON: No. That was nothing. Bunning, who, by the way, is a Republican from Kentucky, he went way stronger than that.
Senator JIM BUNNING (Republican, Kentucky): You put the printing presses into overdrive to fund the government's spending and hand out cheap money to your masters on Wall Street. Your Fed has become the Creature from Jekyll Island. Thank you.
Unidentified Man: Care to respond to that?
(Soundbite of laughter)
Mr. BEN BERNANKE (Federal Reserve Chairman): Let me just correct one point. First�
DAVIDSON: That phrase, the Creature from Jekyll Island, that's the title of a book that's really popular among the most extreme Fed haters.
JOFFE-WALT: So Bunning was basically telling Bernanke you are to blame, this is your crisis, and you bailed out fat cats on Wall Street while we in Congress sat by and worried about America.
DAVIDSON: And Bernanke, in his own much more polite way, said, same to you, pal.
Mr. BERNANKE: It is imperative that the most important thing the Congress can do is find a way to solve the too big to fail problem. I think that's absolutely essential.
JOFFE-WALT: That's probably sounds pretty polite, like a lecture in college, perhaps from Princeton University.
DAVIDSON: No way, those are fighting words. He is saying, no, Senator Bunning, I'm not to blame for the bailouts. If you in Congress gave me the right sort of power, this whole thing would have gone really differently.
JOFFE-WALT: This kept happening. Senators blamed Bernanke for the worst of crisis. Bernanke blames them.
DAVIDSON: Take Senator Dodd. He's the Democrat from Connecticut who chairs the committee. He starts out by saying he supports Bernanke. He disagrees with Bunning, but then he too grills Bernanke. He says that the Ged chairman bungled the whole rescue Of AIG. He wishes Bernanke had been tougher with AIG's creditors.
JOFFE-WALT: And Bernanke, same deal, says he couldn't.
Mr. BERNANKE: We had no authority or leverage over them.
Senator CHRISTOPHER DODD (Democrat, Connecticut): You're the chairman of the Federal Reserve.
Mr. BERNANKE: I don't abuse my supervisory power.
Sen. DODD: Apparently not, in that case.
JOFFE-WALT: So let's translate some of this. These two guys, they've been at it, politely, politically, all year. Dodd wants to take away some of the Fed's power. Bernanke, not surprisingly, doesn't like the idea.
DAVIDSON: No, I think most of us really don't care about this whole blame game. We just want to know what happened.
JOFFE-WALT: Which is why it was really nice when Indiana Democrat Evan Bayh says, yes, we in Congress, we made mistakes, the Treasury messed up, and sure, you too, Mr. Bernanke, could have done better.
Senator EVAN BAYH (Democrat, Indiana): Some degree of modesty and introspection I think is in order and perhaps even a good long look in the mirror before engaging in too much Monday morning quarterbacking. Clairvoyance is an attribute in short supply around here, all the way around.
JOFFE-WALT: And then Evan Bayh just asks Bernanke - come on, honestly, what would you have done differently?
DAVIDSON: And Bernanke says, okay, yeah we did make mistakes. We were slow to protect consumers. We should have made the banks hold more capital, and we won't make those mistakes again.
JOFFE-WALT: And big surprise. Pretty much everyone is sure Bernanke will have the opportunity to make good on that promise. He is expected to be confirmed shortly. I'm Chana Joffe-Walt.
DAVIDSON: And I'm Adam Davidson, NPR News.
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