Use access key #2 to skip to page content.

XMFSinchiruna (27.53)

Senator Bunning on Ben Bernanke

Recs

65

December 03, 2009 – Comments (22)

Four years ago when you came before the Senate for confirmation to be Chairman of the Federal Reserve, I was the only Senator to vote against you.  In fact, I was the only Senator to even raise serious concerns about you.  I opposed you because I knew you would continue the legacy of Alan Greenspan, and I was right.  But I did not know how right I would be and could not begin to imagine how wrong you would be in the following four years.

The Greenspan legacy on monetary policy was breaking from the Taylor Rule to provide easy money, and thus inflate bubbles.  Not only did you continue that policy when you took control of the Fed, but you supported every Greenspan rate decision when you were on the Fed earlier this decade.  Sometimes you even wanted to go further and provide even more easy money than Chairman Greenspan.  As recently as a letter you sent me two weeks ago, you still refuse to admit Fed actions played any role in inflating the housing bubble despite overwhelming evidence and the consensus of economists to the contrary.  And in your efforts to keep filling the punch bowl, you cranked up the printing press to buy mortgage securities, Treasury securities, commercial paper, and other assets from Wall Street.  Those purchases, by the way, led to some nice profits for the Wall Street banks and dealers who sold them to you, and the G.S.E. purchases seem to be illegal since the Federal Reserve Act only allows the purchase of securities backed by the government.

On consumer protection, the Greenspan policy was don’t do it.  You went along with his policy before you were Chairman, and continued it after you were promoted.  The most glaring example is it took you two years to finally regulate subprime mortgages after Chairman Greenspan did nothing for 12 years.  Even then, you only acted after pressure from Congress and after it was clear subprime mortgages were at the heart of the economic meltdown.  On other consumer protection issues you only acted as the time approached for your re-nomination to be Fed Chairman.

Alan Greenspan refused to look for bubbles or try to do anything other than create them.  Likewise, it is clear from your statements over the last four years that you failed to spot the housing bubble despite many warnings.

Chairman Greenspan’s attitude toward regulating banks was much like his attitude toward consumer protection.  Instead of close supervision of the biggest and most dangerous banks, he ignored the growing balance sheets and increasing risk.  You did no better.  In fact, under your watch every one of the major banks failed or would have failed if you did not bail them out.

On derivatives, Chairman Greenspan and other Clinton Administration officials attacked Brooksley Born when she dared to raise concerns about the growing risks.  They succeeded in changing the law to prevent her or anyone else from effectively regulating derivatives.  After taking over the Fed, you did not see any need for more substantial regulation of derivatives until it was clear that we were headed to a financial meltdown thanks in part to those products.

The Greenspan policy on transparency was talk a lot, use plenty of numbers, but say nothing.  Things were so bad one TV network even tried to guess his thoughts by looking at the briefcase he carried to work.  You promised Congress more transparency when you came to the job, and you promised us more transparency when you came begging for TARP.  To be fair, you have published some more information than before, but those efforts are inadequate and you still refuse to provide details on the Fed’s bailouts last year and on all the toxic waste you have bought.

And Chairman Greenspan sold the Fed’s independence to Wall Street through the so-called “Greenspan Put”.  Whenever Wall Street needed a boost, Alan was there.  But you went far beyond that when you bowed to the political pressures of the Bush and Obama administrations and turned the Fed into an arm of the Treasury.  Under your watch, the Bernanke Put became a bailout for all large financial institutions, including many foreign banks.  And you put the printing presses into overdrive to fund the government’s spending and hand out cheap money to your masters on Wall Street, which they use to rake in record profits while ordinary Americans and small businesses can’t even get loans for their everyday needs.

Now, I want to read you a quote:  “I believe that the tools available to the banking agencies, including the ability to require adequate capital and an effective bank receivership process are sufficient to allow the agencies to minimize the systemic risks associated with large banks.  Moreover, the agencies have made clear that no bank is too-big-too-fail, so that bank management, shareholders, and un-insured debt holders understand that they will not escape the consequences of excessive risk-taking.  In short, although vigilance is necessary, I believe the systemic risk inherent in the banking system is well-managed and well-controlled.

That should sound familiar, since it was part of your response to a question I asked about the systemic risk of large financial institutions at your last confirmation hearing.  I’m going to ask that the full question and answer be included in today’s hearing record.

Now, if that statement was true and you had acted according to it, I might be supporting your nomination today.  But since then, you have decided that just about every large bank, investment bank, insurance company, and even some industrial companies are too big to fail.  Rather than making management, shareholders, and debt holders feel the consequences of their risk-taking, you bailed them out.  In short, you are the definition of moral hazard.

Instead of taking that money and lending to consumers and cleaning up their balance sheets, the banks started to pocket record profits and pay out billions of dollars in bonuses.  Because you bowed to pressure from the banks and refused to resolve them or force them to clean up their balance sheets and clean out the management, you have created zombie banks that are only enriching their traders and executives.  You are repeating the mistakes of Japan in the 1990s on a much larger scale, while sowing the seeds for the next bubble.  In the same letter where you refused to admit any responsibility for inflating the housing bubble, you also admitted that you do not have an exit strategy for all the money you have printed and securities you have bought.  That sounds to me like you intend to keep propping up the banks for as long as they want. 

Even if all that were not true, the A.I.G. bailout alone is reason enough to send you back to Princeton.  First you told us A.I.G. and its creditors had to be bailed out because they posed a systemic risk, largely because of the credit default swaps portfolio.  Those credit default swaps, by the way, are over the counter derivatives that the Fed did not want regulated.  Well, according to the TARP Inspector General, it turns out the Fed was not concerned about the financial condition of the credit default swaps partners when you decided to pay them off at par.  In fact, the Inspector General makes it clear that no serious efforts were made to get the partners to take haircuts, and one bank’s offer to take a haircut was declined.  I can only think of two possible reasons you would not make then-New York Fed President Geithner try to save the taxpayers some money by seriously negotiating or at least take up U.B.S. on their offer of a haircut.  Sadly, those two reasons are incompetence or a desire to secretly funnel more money to a few select firms, most notably Goldman Sachs, Merrill Lynch, and a handful of large European banks.  I also cannot understand why you did not seek European government contributions to this bailout of their banking system.

From monetary policy to regulation, consumer protection, transparency, and independence, your time as Fed Chairman has been a failure.  You stated time and again during the housing bubble that there was no bubble.  After the bubble burst, you repeatedly claimed the fallout would be small.  And you clearly did not spot the systemic risks that you claim the Fed was supposed to be looking out for.  Where I come from we punish failure, not reward it.  That is certainly the way it was when I played baseball, and the way it is all across America.  Judging by the current Treasury Secretary, some may think Washington does reward failure, but that should not be the case.  I will do everything I can to stop your nomination and drag out the process as long as possible.  We must put an end to your and the Fed’s failures, and there is no better time than now.

22 Comments – Post Your Own

#1) On December 03, 2009 at 7:56 PM, lquadland10 (< 20) wrote:

The IMF has done a GREAT JOB. 1912 1.00 1913 Creation of the IMF. 1970 dollar is worth 50 cents. 2009 that same dollar is now worth 4 cents. So don't we all agree that debasing our dollar by 96% over almost 100 years is doing a great job?

Report this comment
#2) On December 03, 2009 at 7:58 PM, XMFSinchiruna (27.53) wrote:

Ron Paul on C-Span right now (recorded earlier)

Report this comment
#3) On December 03, 2009 at 8:01 PM, XMFSinchiruna (27.53) wrote:

Actually, if you can tear yourselves away from "Must See TV", Bernanke's confirmation hearing is about to be on C-Span.

Report this comment
#4) On December 03, 2009 at 8:04 PM, Gingerbreadman55 (26.26) wrote:

*slow clap*

Report this comment
#5) On December 03, 2009 at 8:25 PM, scoobamang (< 20) wrote:

Hear hear!

Report this comment
#6) On December 03, 2009 at 8:27 PM, Starfirenv (< 20) wrote:

Sinch- Thanks for sharing and the heads up. Love your work. Rec #11.

Report this comment
#7) On December 03, 2009 at 8:36 PM, XMFSinchiruna (27.53) wrote:

I sure hope American voters clean house on both sides of the aisle during the next Congressional election. Even if just to send a message. Me must resist encumbency and the expectation thereof to reduce corruption. If you have identified individual representatives in your voting district who stand out from the pack with honor and honesty, then by all means reward them as you see fit, but can we at least agree as a nation to replace those who just voted for Bernanke's reconfirmation?

Some on the panel are persistent about expanding the Fed's regulatory role. Fools who recognize the state of collusion between the powerful financial industry interests, the Fed, Treasury, and ranking members of the banking and related committees know what time it is .. it's time to vote. :)

Show your representatives what you think of systemic corruption and legislative allegiances that are effectively up for sale to the highest bidder or dutifully surrendered to the brokers of power. Perhaps consider supporting third party or independent candidates this time around. If you find no viable alternatives to entrenched representatives of the two parties, perhaps the election needs a Fool to run. I would love to see people all over this country embrace the political process to restore representation of the will of the people in Congress.

I know that the Fool is more comfortable with financial content as opposed to political content, but in this case I believe this is a question that relates very directly to the investment landscape. We must restore free markets, and we must shape very carefully vetted regulatory reform that includes breaking the links of influence discussed above between the financial industry and the government responsible for keeping its activities in check with the best interests of the people. This is not a partisan question, and I am not with these wordsexpfressing support for any particular candidates or parties. I'm just suggesting that our political system may be in need of something of a wake-up call to remind them that they work for us. Is that really such a controversial idea?

Thanks for listening... Sinch

Report this comment
#8) On December 03, 2009 at 8:46 PM, neskolf (29.76) wrote:

 In short, you are the definition of moral hazard.

Awesome.  Simply awesome.

Report this comment
#9) On December 03, 2009 at 9:01 PM, StatsGeek (29.30) wrote:

Bunning hits the nail on the head.  The fact that Bernanke will likely be reconfirmed makes my blood boil.  I just can't for the life of me understand why more American's don't get it.  Why they don't even notice that they're being robbed to make the rich even richer, in reverse Robin Hood fashion.  Are Americans really THAT ignorant?

Report this comment
#10) On December 03, 2009 at 9:27 PM, nuf2bdangrus (< 20) wrote:

In the end, there is a big bust coming, when the public, like Wall Street, decides that the gov't "has their back".  They will walk away from thier mortgage, or get a gov't mod, run their dub up, and walk away.  Then we have spend more trillions for nothing...

Report this comment
#11) On December 03, 2009 at 9:40 PM, Harold71 (22.09) wrote:

The fact that Bernanke will likely be reconfirmed makes my blood boil.

WHA?   Bernanke is the best thing going for your commodity plays.   He will destroy the dollar to save the economy -- and it's working perfectly!

Yes, it's criminal.  Unfortunately (for most of us), it's all happening the way it's supposed to happen.  When you realize that the entire world is one gigantic cosmic joke, well, you just have to have a little laugh.

Report this comment
#12) On December 03, 2009 at 11:01 PM, ChrisGraley (29.88) wrote:

Bunning also seems to be on board with auditing the Fed! I sense a movement brewing here! This is the happiest that I've felt about our country in a long while! We need a few more politicians to sabre rattle! The "I'm mad as hell and I'm not gonna take it anymore!" quote should come up a few times! I have never seen so many politicians diverge from both parties in this way before. This is good news for the country. Who would have thought that the winning formula would have been 1 corrupt president followed by 2 inept ones!

Report this comment
#13) On December 03, 2009 at 11:04 PM, Teacherman1 (48.88) wrote:

I liked him as a baseball player. Not sure what his qualifications are to be a Senator.

JMO and worth exactly what I am charging for it. 

Report this comment
#14) On December 03, 2009 at 11:40 PM, rofgile (99.31) wrote:

I looked up Bunning on the Wikipedia, because I had never heard of him.  Here's his entry:

As was expected in light of Bunning's previous career as a baseball player, he has been very interested in Congress's investigation of steroid use in baseball. Bunning has also been outspoken on the issue of illegal immigration taking the position that all illegal immigrants should be deported.

Bunning was also the only member of the United States Senate Committee on Banking, Housing and Urban Affairs to have opposed Ben Bernanke for Chief of the Federal Reserve. He said it was because he had doubts that Bernanke would be any different from Alan Greenspan.

In April 2006, Time magazine called him one of "America's Five Worst Senators".[11] The magazine dubbed him The Underperformer for his "lackluster performance", saying he "shows little interest in policy unless it involves baseball", and criticized his hostility towards staff and fellow Senators and his "bizarre behavior" during his 2004 campaign.[12]

On December 6, 2006, only Bunning and Rick Santorum voted against the confirmation of Robert Gates as Secretary of Defense, with Bunning saying that "Mr. Gates has repeatedly criticized our efforts in Iraq and Afghanistan without providing any viable solutions to the problems our troops currently face. We need a secretary of defense to think forward with solutions and not backward on history we cannot change."

Jim Bunning reportedly has blocked[13] the move to restore public access to the records of past United States Presidents which had been removed under Executive Order 13233.

A statewide opinion poll said Bunning had a 35% approval rating, with 55% disapproving as of September 2009.[14]

In January 2009, Bunning missed more than a week of the start of Congress in January 2009. Bunning said by phone that he was fulfilling "a family commitment six months ago to do certain things, and I'm doing them." Asked whether he would say where he was, Bunning replied: "No, I'd rather not."[15]

In February 2009, at the Hardin County Republican Party's Lincoln Day Dinner, while discussing conservative judges, Bunning predicted that Supreme Court Justice Ruth Bader Ginsburg would likely be dead from pancreatic cancer within nine months.[16] Bunning later apologized if he had offended Ginsburg with his remarks and offered his thoughts and prayers to Ginsburg; his press release misspelled the Justice's last name twice.[17]

 

Report this comment
#15) On December 04, 2009 at 7:38 AM, dbjella (< 20) wrote:

TMFSinchiruna

Great stuff!!!!!!  

Do you feel trapped in a conundrum of wanting what is best for the world versus what is best for you? 

When I saw Bernanke on 60 Minutes a while back I thought to myself that he is a smarmy man who thinks he needs to convince people that he is doing a great job.  He talked in the interview about how the crisis affected middle America and their small towns.  I kept waiting for the interviewer to ask him about all the inflation that has occurred since the Feds existence, the booms and busts, and who (more the "foreign central banks) is getting money from the Fed.  60 Minutes use to ask tough questions and make people squirm.  After the interview, I thought they were going to hug and get dinner.  

For this country, I wish we would go back to the gold standard.  For me personally, print baby print! 

Report this comment
#16) On December 04, 2009 at 7:54 AM, XMFSinchiruna (27.53) wrote:

dbjella

Absolutely not. I feel no such conflicting allegiances to future scenarios. In a heartbeat, I would rather lose every penny I have invested and have this country find a sustainable way out of this mess into both meaningful recovery for main street and the elimination of the impairment of the USD.

Hands down, not even close.

We're talking about the well being of our country and of the millions of peope we call our fellow countrymen. In a heartbeat ... I would relish the thought of having gold return below $300 and wiping my investments off the face of the Earth if it meant that Americans and their grandchildren could have their future back.

 

Report this comment
#17) On December 04, 2009 at 8:07 AM, DaretothREdux (41.32) wrote:

I have always like Jim. He is my Senator and of late it looks as if the Ron Paul people have taken over his campaign. It is also rumoured that he is senile....who knows? I wish it were Mitch's election year instead of his. But we will soon have Sen. Dr. Rand Paul to fill his shoes!

(fingers crossed)

Dare

Report this comment
#18) On December 04, 2009 at 10:54 AM, StatsGeek (29.30) wrote:

I agree with Chris Graley -- I will be voting against almost every incumbent next year, Republican or Democrat doesn't matter.  The government no longer represents the people.

Report this comment
#19) On December 04, 2009 at 11:02 AM, starbucks4ever (98.70) wrote:

"Why they don't even notice that they're being robbed to make the rich even richer, in reverse Robin Hood fashion.  Are Americans really THAT ignorant?"

Not really. It's just that they own some shares of Reverse Robin (ROBIN.OB). 

Report this comment
#20) On December 04, 2009 at 11:38 AM, jddubya (< 20) wrote:

#19 - LOL

Report this comment
#21) On December 04, 2009 at 12:44 PM, alexpaz (29.00) wrote:

Bunning for President

Report this comment
#22) On December 04, 2009 at 2:52 PM, ocsurf (< 20) wrote:

AWESOME!!!

Report this comment

Featured Broker Partners


Advertisement