2010-01-26: Bernanke May Get Second Term
"He has my strongest support. I think he's done a good job," Obama told ABC News.
"What we need is somebody at the Federal Reserve who can make sure that the progress that we've made in stabilizing the economy continues. I think Bernanke is the best person for that job," the president said.
With Bernanke's term expiring Sunday, Senate Majority Leader Harry Reid, D-Nev., expects a confirmation vote by the end of the week, his spokesman said. David Axelrod, a top White House adviser, said Bernanke has the votes to keep his job.
With this announcement, the President himself joins the effort to keep "Banana Boat" Ben Bernanke in office. Mr. Bernanke is the foremost expert on the Great Depression (the 1930s), and with the so-called recovery being a no-go, we may indeed need his expertise in the near future.
Yet, this ignores some serious errors in judgment. Whether it was Banana Boat Ben, Tim Geithner, or someone else, deciding to bail out the big financial companies merely rewards their reckless behavior. Yes, allowing them to fail would have caused an exceedingly deep recession, much deeper than what we are currently experiencing, but I am sure it would be ending by now.
The smaller financial institutions, the ones that were, for the most part, run more conservatively, are now facing high regulatory costs and other financial pressures that are squeezing them out of business, even as the big guys that caused the problem are able to report improved financial conditions. This is, in my view, an intentional choice that someone made. To preserve the largest institutions, even at the expense of the well-run and the local institutions that keep American small business's doors open.
Rather than this, a smart move would have been to issue an immediate freeze on foreclosures, followed by a mandatory re-pricing to market for owner-occupied residential properties. Yes, this would have wiped out most of the bigger institutions, and would have threatened many of the smaller ones also. But winding down the big guys in an orderly fashion would have benefited everyone, redirecting investment capital into local institutions that lack "market power".
In other words, re-confirming Mr. Bernanke will be seen as a reward for incompetence.
And yet, Mr. Bernanke wasn't the only one involved. The entire financial hierarchy really should be fired outright and forced to beg in front of the last surviving K-mart store.
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