25
Aug
2009
Bernanke Again
The guy who didn’t see the financial meltdown coming is being offered another four-year term at the head of the Federal Reserve. The question is why.
Did the president want to reassure a stock market that just hit a high for the year? Does he believe the reappointment of the one who rescued Wall Street quite generously will keep the market climbing?
Is he sending the loudest possible message to National Economic Advisor Larry Summers, who desperately wanted to be nominated Fed Chair? Perhaps this is his way to punish the man who advocated repealing the law that kept investment bankers and regular ones from comingling their business activities. It was the repeal of the Glass Steagall Act under President Clinton and the resultant comingling that laid the groundwork for the collapse of the housing market and the ensuing Great Recession.
Perhaps Barack Obama, tired of bad press and falling approval ratings and conscious of the release of news that the deficit will be $9 trillion in 10 years (instead of the previously estimated $7 trillion), simply offered up a Wag-the-Dog news moment to keep his poll numbers from falling farther. That motivation can only provide a partial explanation, since a) it’s not at all sure to work and b) he could have chosen other manufactured news moments unrelated to the potential growth of the U.S. economy. As a matter of fact, he did choose another one: the investigation and probable prosecution of CIA interrogators, as well as removing the task of terrorist interrogation from the CIA and placing it under the National Security Agency. There’s a lot happening while the president’s on vacation, actually.
But back to the question: why Bernanke again, when he didn’t notice the precarious nature of the bubble before it burst and his solution to the explosion was to pour trillions of good dollars after bad – an act many believed exceeded his power as Fed Chair.
Maybe there’s no one else remotely acceptable. That’s the truly sobering thought.