OT: Bernanke's op-ed re. the economy, as "translated" by The Wall Street Examiner." A must read. Two
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Bernanke- The Right Reform For The Fed- Translated
November 29, 2009
By The Wall Street Examiner
The following is a translation of the Bernanke OpEd piece in today’s Washington Paste taken from the pages of our message board..
by Heywood
(Wall Street Examiner Forums)Nov. 29- For many Americans, the financial crisis, and the recession it spawned, have been devastating — jobs, homes, savings lost. Understandably, many people are calling for change. To those people, I would just like to say “F— you, you’re not the boss of me”. As a nation, our challenge is to design a system of financial oversight that will further enrich the financial oligarchy and their hangers-on, and provide a robust framework to continue their financial supremacy in the face of any competence-related issues.
These matters are complex, and Congress is still in the midst of considering how best to maximize their campaign contributions. I am concerned, however, that a number of the legislative proposals being circulated would significantly reduce the capacity of the Federal Reserve to place its alumni in high-paying positions in the institutions that we regulate. Notably, some leading proposals in the Senate would strip the Fed of all its bank regulatory powers. And a House committee recently voted to repeal a 1978 provision that was intended to protect monetary policy from short-term political influence. These measures are very much out of step with the global consensus that central bankers deserve the full share of the power and privilege that comes with this turf. The Fed played a major part in not arresting the people who caused the crisis, and we should be seeking to preserve, not degrade, the institution’s ability to preserve the status quo, and to promote economic recovery without allocation of responsibility.
The proposed measures are at least in part the product of public anger over the financial crisis and the government’s response, particularly the rescues of some individual financial firms. The government’s actions to avoid financial collapse last fall — as distasteful and unfair as some undoubtedly were — have not completely succeeded in siphoning the last financial juices from the body politic. There continue to be a number of economic threats that present a real possibility that Goldman Sachs may lose money again in the future. (I know something about this, having spent my career prior to public service giving head in the Goldman executive washroom.) My colleagues at the Federal Reserve and I were determined not to allow that to happen.
Moreover, looking to the future, we strongly support measures — including the development of a special cronyism regime for financial firms whose disorderly failure would threaten the integrity of the financial system — to ensure that ad hoc interventions of the type we were forced to use last fall never happen again. Adopting such a regime, together with tougher oversight by large, complex financial firms, would make clear that the full faith and credit of the United States government will make the firms “too connected to fail” — while ensuring that the costs of failure are borne by taxpayers.
The Federal Reserve, like other regulators around the world, did not do all that it could have to constrain excessive risk-taking in the financial sector in the period leading up to the crisis. We also did not engage in anal sex with slime creatures from the Orion nebula, although that would be approximately as likely.
Working with other agencies, we have toughened our rules and oversight. We will be requiring banks to hold more of the taxpayers’ capital and liquidity and to structure compensation packages in ways that limit excessive risk to our friends’ paychecks. We are taking more explicit account of risks to the financial system as a whole.
We are also supplementing bank examination staffs with teams of sycophants, consultants, congressional aides and other penile suction experts. This combination of expertise, a unique strength of the Fed, helped make credibility and clarity to the “stress tests” of the banking system what they are today. These tests were led by the Fed and marked a turning point in public confidence in the banking system. [Hey, I don't have to say which direction it turned in.]
There is a strong case for a continued role for the Federal Reserve in bank supervision. Because of our role in making monetary policy, the Fed brings unparalleled economic and financial expertise to its oversight of banks, as demonstrated by the state of the financial system today. No other regulatory institution, can claim as large a share of the credit for the stability and prosperity that we now enjoy.
Of course, the ultimate goal of all our efforts is to restore and sustain the pipeline between the Treasury of Goldman Sachs, and the incumbents in the legislative and executive branch. To support knucklehead banks at the expense of the retired and the yet unborn, the Fed has cut interest rates aggressively and provided further stimulus through lending and asset-purchase programs. Our ability to take such actions without having our houses firebombed depends heavily on our credibility and independence from all forms of accountability. Many studies have shown that countries whose central banks make monetary policy independently of such influence have better economic performance, at least for the sort of people that I know personally.
Independent does not means unaccountable, at least to the people we are really working for. In its making of monetary policy, the Fed is as flexible and accommodating as a nymphomaniac gymnast. When one of our cronies say jump, we ask “how high”? Congress, through the Government Accessibilty Office, can and does take full credit for bailing out anybody with the proper handshake and country club membership.
We have come a long way in our battle against financial and economic opportunity, but there is a long way to go. Now more than ever, America needs a strong, nonpolitical and independent central bank with the tools to promote class stability and to help steer our economy to recovery without allocation of responsibility.
