“… a House Republican charged that a whistleblower had alerted Congress to specific documents provide “troubling details” of Bernanke’s role in the AIG bailout.” — Ryan Grim
This new startling revelation that Ben Bernanke somehow had ulterior motives for bailing out big banks is really nothing new when we consider how the banking system is structured in the United States. With a central bank in charge of interest rates, and a defective congress in charge of lawmaking, it really is no surprise that Ben Bernanke would be suspected of being complicit in the biggest financial meltdown in the United States history.
Looking at Ben Bernanke we see that he was too easy with his lax quantitative easing for the Obama and Bush adminsitrations, while Congress didn’t like him because he wasn’t easy enough. When the President gave a speech recently about “greedy bankers” trying to make a profit we can confidently say he was absolutely wrong because the reason the bankers were able to be greedy was because the central bankers like Greenspan and subsequently were too easy. Indeed, they lowered interest rates to extremely low levels and made money too cheap to be lent to banks during their respective tenures.
Combining these factors of guaranteed loans from government actually created the financial crises we experienced in the last couple years. Since we are repeating the mistakes of the past of bailing out institutions and making money too cheap by leaving central banks in charge of our monetary supply, we will experience a much deeper problem in the long run. There is a reason to regulate banks because banks are taking a lot of risks with insured deposits.
The reason the banks took so much risk with these deposits was because the government insured them. If there was no insurance these banks would not be taking these risks because the depositors would not let them. So once the government already poisoned the market with guaranteed bank accounts and financial instruments, government comes in with more regulations to undo the effects of the regulation they already created.
Is Bernanke Hiding A Smoking Gun?
Posted: 01-26-10 Huffington Post
A Republican senator said Tuesday that documents showing Federal Reserve Board Chairman Ben Bernake covered up the fact that his staff recommended he not bailout AIG are being kept from the public. And a House Republican charged that a whistleblower had alerted Congress to specific documents provide “troubling details” of Bernanke’s role in the AIG bailout.
Sen. Jim Bunning (R-Ky.), a Bernanke critic, said on CNBC that he has seen documents showing that Bernanke overruled such a recommendation. If that’s the case, it raises questions about whether bailing out AIG was actually necessary, and what Bernanke’s motives were.
A letter Bunning sent Monday to Banking Committee Chairman Chris Dodd (D-Conn.) also refers to an “[e]mail exchange regarding restructuring of assistance to AIG, initiated by Treasury Secretary Timothy Geithner” in March 2009.
Senators will be voting on Bernanke’s confirmation for a second term in the coming days. But only senators on the Banking Committee have had access to documents that illuminate just what decisions he made and how he made them. And that access only came after Bunning publicly complained that Dodd and Sen. Richard Shelby (R-Ala.) were the only members of the committee could see them.
Meanwhile, Rep. Darrell Issa (R-Calif.), who has been investigating the AIG bailout in his role as ranking Republican on the House Oversight and Government Reform Committee, said that a whistleblower has informed him of “troubling details” of Bernanke’s role in the bailout.
There may be nothing incriminating in the documents, but without access to them, the Senate will be voting to confirm him in the dark.
Senators from both parties who say they will vote to confirm Bernanke credit him with deft actions that averted a second Great Depression. Those actions, they argue, outweigh what blame he deserves for causing the crisis in the first place.
“He’s done a very good job in the last year. And but for his work, we would be in a very different position in this country today,” said Dodd Monday. “Now that’s hard to prove a negative. But the fact of the matter is, our entire financial system might have collapsed but for his leadership.”