The Fed's Racket Exposed

A reader provides us with the following letter he received from Senator Mikulski in response to dissatisfaction expressed about Bernanke's reconfirmation. The response from the Senator demonstrates precisely the type of intellectual racket that the Fed is exposing gullible and incompetent senators to, in forcing them to pass law after law that is only in the Fed's, and thus Wall Street's interests, as the alternative would always be a "market nose dive." Enough with the pandering. If senators can not think and verify independently, they should be replaced immediately with people who are capable and qualified to make critical decisions about this country without Wall Street's influence.

Thank you for getting in touch with me about Ben Bernanke's nomination to chair the Federal Reserve.  It's great to hear from you.

Americans are angry and they are anxious.  In diners and at the dry cleaners, I'm hearing tremendous anxiety about the economy.  People are feeling like their middle class way is slipping away, and that brings a lot of anger, fear and frustration.

When Chairman Bernanke thought Wall Street was on the verge of a crisis, he acted dramatically.  He used new powers for new programs.  Well, the job market is in a crisis now.  But the Fed's response has been tame and tepid.  We need the same urgency from the Federal Reserve to jumpstart the job market that was given to Wall Street to jump start the financial markets.

I voted to confirm Mr. Bernanke because he is not a man of ideology.  When we needed him the most, his expertise and level-head probably helped prevent a catastrophe.  Bernanke didn't panic and he took his lessons from economic history, a subject which he has studied closer than anyone else.  No one understands the risks the economy faces better than he does.

I was advised that rejecting his nomination would cause markets to nose dive, which would hurt retirees and families saving for their future.  I am not enthusiastic in my support.  But I think Mr. Bernanke understands the job that he still has to do.

We need bold new approaches - and I'll fight for them.   I let Mr. Bernanke know that I am focused on three things to get our economy going again: creating jobs, getting more lending to the middle economy and small businesses, and helping people get out from under the threat of foreclosure.

Thanks again for getting in touch with me.  Knowing of your views was helpful to me.  Please let me know if I can be of any assistance to you in the future.

Barbara A. Mikulski
United States Senator

And for the counterpoint, here is an example of a Senator who does not fall for the Fed's racket:

Dear Friend:

Thank you for contacting me. I appreciate hearing your thoughts about President Obama's decision to nominate Ben Bernanke for another four-year term as Chairman of the Federal Reserve (the Fed). I voted against approving Mr. Bernanke, who was nevertheless confirmed by the Senate by a vote of 70-30.

My opposition to Mr. Bernanke is based on a number of concerns about his actions during both the run up to the financial crisis and the crisis itself. Before the financial crisis hit in 2008, Mr. Bernanke failed to either diagnose the housing bubble or adequately protect consumers from many of the abusive financial products, especially credit cards and mortgage loans, which helped to contribute to that bubble. These mistakes helped to precipitate the worst financial crisis since the Great Depression, and while Mr. Bernanke has taken bold and creative steps to help stop the bleeding, I believe that his record prior to the crisis does not warrant him a second term as Chairman.

In the midst of the crisis, I am also concerned that the Fed has provided an unknown number of financial institutions with billions of dollars at almost zero interest without appropriate transparency or accountability, including to the insurance giant AIG. While the current economic crisis has certainly made increased action by the Fed understandable, it is inexplicable to me that the Fed has taken such unprecedented action without putting conditions on these loans that would require the funds to be used to make loans to small businesses, or would restrict the payment of unwarranted bonuses. In addition, the Fed has refused to inform Congress or the public the extent of these financial commitments. For this reason, I am a cosponsor of S. 604, the Federal Reserve Sunshine Act of 2009. This legislation would require the Comptroller General of the United States to conduct an audit of the Federal Reserve and submit those findings to Congress to determine what commitments the Fed has made in response to the financial crisis.

Finally, I am troubled that, in the wake of the financial crisis, Mr. Bernanke has argued against creating an independent consumer financial protection agency. It is painfully clear to me that the Fed's failure to protect consumers from abusive products in areas like credit cards and mortgage loans helped to fuel the spiral of debt that contributed to the economic downturn. Given the Fed's abysmal failure in this area, I find it remarkable that Mr. Bernanke wants to give the Fed more authority. This neglect for adequate consumer protections is unacceptable to me, and I am not convinced that Mr. Bernanke would behave any differently now than he did before the crisis.

While I have heard the concerns of many that the failure to confirm Mr. Bernanke would have damaged the financial markets and jeopardized our economy recovery, I do not believe that anyone, including Mr. Bernanke, is too big to be replaced. We should not hold our economy hostage to the Wall Street threat that total economic collapse is the sure result of not doing everything they want.

Thanks again for contacting me. Please do not hesitate to do so again about this or any other issue that may concern you.

Tom Harkin
United States Senator