FED CHAIRMAN BEN BERNANKE, TIME'S PERSON OF THE YEAR? YOU'RE JOKING, RIGHT?

SENATE BANKING PANEL VOTES TO CONFIRM BERNANKE TO SECOND TERM AS FEDERAL RESERVE CHAIRMAN

Federal Reserve Bank Chairman Ben Bernanke wins the Time Magazine "Person of the Year" for 2009? You've got to be kidding me! Who is the runner-up, Bernie Madoff? Ben Bernanke's being named Time Magazine's "Person of the Year" has got to be right up their with President Obama's Nobel Peace Prize and Al Gore's Oscar award for his phony global warming charade. Bernanke joins other "laudable luminaries", such as Joseph Stalin (twice, in 1939 & 1942), and Adolf Hitler in 1938. Time must use the liberal grading method to determine their winners.

Assuming this is an esteemed award, this has to go into the growing category of rewarding failure and poor decision-making. Considering this is supposedly our nation's most brilliant financial mind, reviewing some of his past erroneous statements should be extremely unsettling, if not discrediting him completely. Apparently, Time hadn't taken the time to watch this readily accessable video (a must watch):

After watching these past blunders, isn't it reassuring that Ben Bernanke said on September 16, that the recession was likely over? Keep in mind that these are only Bernanke's bloopers from one network, CNBC. It's not his complete collection, which wouldn't fit in this, or any other article (although I've listed a few of these jewels below that aren't in the video).

In an attempt to explain Time Magazine's selection of Bernanke, they listed some of the actions he's taken, apparently thinking that these are positives. I disagree and believe that eventually the economic "chickens will come home to roost":

"...when turbulence in U.S. housing markets metastasized into the worst global financial crisis in more than 75 years, he conjured up trillions of new dollars and blasted them into the economy; engineered massive public rescues of failing private companies; ratcheted down interest rates to zero; lent to mutual funds, hedge funds, foreign banks, investment banks, manufacturers, insurers and other borrowers who had never dreamed of receiving Fed cash; jump-started stalled credit markets in everything from car loans to corporate paper; revolutionized housing finance with a breathtaking shopping spree for mortgage bonds; blew up the Fed's balance sheet to three times its previous size; and generally transformed the staid arena of central banking into a stage for desperate improvisation."

Uh...excuse me, but are they thinking that these are positive actions? Again, in Time's well-written words,

• "he conjured up trillions of new dollars,"

• "ratcheted down interest rates to zero"

• loaned money to everyone under the sun "and other borrowers who had never dreamed of receiving Fed cash"

• "blew up the Fed's balance sheet to three times its previous size"

MORE OF BEN BERNANKE'S "GREATEST HITS":

Among Bernanke's blunders were, for example, in July of 2005, when given the opportunity to discuss if there was a housing bubble, if it was going to burst, what is the worse-case scenerio, and would it (housing prices falling) lead to a future recession, Bernanke confidently replied on CNBC that,

"I guess I don't buy your premise. It's a pretty unlikely possibility. We have never had a decline in housing prices on a national basis, so what I think is what is likely to happen is that housing prices may slow, maybe stabilize, might slow consumer spending a bit...I don't think it's going to drive the economy from it's full employment path though."

Considering how blind our brilliant regulators are, the next quote is possibly even a bigger joke. It's interesting that government regulators, who were completely asleep at the wheel, are not given any responsibility, nor taking any, for the "Great Recession". Rather than holding existing regulators accountable, they pass blame and turn to the only "logical" conclusion", more inept regulators! Being a bureaucrat himself, Bernanke exhibited amazing faith that the current crop of "watchdogs" would never let what happened, happen. Also in 2005, Bernanke declared:

"I am confident that the bank regulators will pay close attention to the kind of loans that are being made, making sure that loan underwriting is done right." "I do think that this a localized problem and won't affect the national economy."

Most say that the current recession started in December of 2007. Just months before, in February of 2007, in an attempt to calm the fears of the subprime mortgage market, Bernanke gave the assessment that:

"There is no indication at this point that the subprime mortgage issues have seeped into the broader mortgage market which still seems to be healthy."

March 28, 2007:

"At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained." "Overall, the economy appears likely to continue to expand at a moderate pace over coming quarters."

May 17, 2007:

"All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system."

October 15th, 2007:

"As I indicated in earlier remarks, it is not the responsibility of the Federal Reserve--nor would it be appropriate--to protect lenders and investors from the consequences of their financial decisions."

Hmmm...Can you say, "AIG," "Chrysler," "GM," and "Citigroup," for starters?

July 16th, 2008

Regarding Fannie Mae and Freddie Mac, Bernanke said that they were in: "no danger of failing." He went on to say that the "best solution" is to keep Fannie and Freddie "in their current form."

Needless to say, on September 7, 2008, both Fannie Mae and Freddie Mac were placed in conservatorship, which is a politically-correct way of saying that they went belly-up.

Meanwhile, the Senate Banking Committee voted 16-7 to confirm Fed Chairman Ben Bernanke to a second term. It's interesting to note that even some of the comments from those Senators voting in favor of confirmation expressed some reservation. Following are a few comments from both those who voted in favor of Bernanke and those who voted against. Below the quotes is the complete breakdown of how each Senator voted in the decision:

SENATORS WHO VOTING "YES":

“I support this nomination. But I want to be clear that with my support comes my insistence that we carefully examine the role of an institution that runs the risk of becoming too complicated to succeed.”–Sen. Chris Dodd (D., Conn.)

“Going forward there is no doubt the Fed can do better, it can be more proactive and it can better communicate with Congress. But let’s not forget what Mr. Bernanke and the Fed did right during the last many challenging months.” –Sen. Tim Johnson (D., S.D.)

“Did Bernanke get all the calls right? Absolutely not. Did he make many mistakes? Absolutely… But I think that the experience that Chairman Bernanke has had over the last year and a half makes him by far, of the people that I know, the most well equipped person to lead the Fed over the next several years.” –Sen. Bob Corker (R., Tenn.)

SENATORS VOTING "NO":

“I strongly disapprove of some of the past deeds of the Federal Reserve while Ben Bernanke was a member and its chairman, and I lack confidence in what little planning for the future he has articulated.” –Sen. Richard Shelby (R., Ala.)

“From monetary policy to regulation, consumer protection, transparency, and independence, Chairman Bernanke’s time as Fed Chairman has been a failure. We must put an end to his and the Fed’s failures, and there is no better time than now.” –Sen. Jim Bunning (R., Ky.)

“We have yet to get to the bottom of what the problems are and how we’re going to change them. We cannot have a Federal Reserve that the majority of Americans no longer trust.” –Jim DeMint (R., S.C.)

Democrats:

Christopher J. Dodd Chairman (D-CT) Aye

Tim Johnson (D-SD) Aye

Jack Reed (D-RI) Aye

Charles E. Schumer (D-NY) Aye

Evan Bayh (D-IN) Aye

Robert Menendez (D-NJ) Aye

Daniel K. Akaka (D-HI) Aye

Sherrod Brown (D-OH) Aye

Jon Tester (D-MT) Aye

Herb Kohl (D-WI) Aye

Mark Warner (D-VA) Aye

Jeff Merkley (D-OR) No

Michael Bennet (D-CO) Aye

Republicans:

Richard C. Shelby Ranking Member (R-AL) No

Robert F. Bennett (R-UT) No

Jim Bunning (R-KY) No

Mike Crapo (R-ID) No

Bob Corker (R-TN) Aye

Jim DeMint (R-SC) No

David Vitter (R-LA) No

Mike Johanns (R-NE) Aye

Kay Bailey Hutchison (R-TX) No

Judd Gregg (R-NH) Aye

In the Time interview, when asked about the ill-conceived policy of "Too Big to Fail", Bernanke shockingly responded,

"I think is an enormous problem. I want to be very, very clear: too big to fail is one of the biggest problems we face in this country, and we must take action to eliminate too big to fail."

Finally, there's something that I agree with him on. That may be the most accurate statement Bernanke's made in years. It's better late, than never. But, in reality, it's too little, too late.

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