[Congressional Record Volume 156, Number 12 (Thursday, January 28, 2010)]
[Senate]
[Pages S295-S317]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
Departure of Robert Russell
Mr. PRYOR. Mr. President, Holmes had Watson, Mat Dillon had Chester,
even Andy had Barney; for the past 20 years, I have had Bob Russell.
Bob has long been a trusted friend, and for the past 7 years he has
been my great chief of staff, providing valuable counsel, know-how, and
humor. Bob is headed to the private sector, but I could not let him
leave without thanking him for his public service in the Arkansas
attorney general's office and in the Senate.
Bob was instrumental in assembling an exceptional team of talented
aides, many of whom are in the gallery today. Over the last 7 years, he
led that team as we steered a number of legislative initiatives to
success, including legislation to improve children's safety, help
military families, and strengthen Arkansas communities. None of these
accomplishments would have been possible without Bob's hard work,
integrity, and deliberation.
Bob believes in the ``do right'' rule. He came to the Senate to get
these done for Arkansas, and when he realized that partisanship was
getting in the way, he took action. Along with Tom Ingram, former chief
of staff to Lamar Alexander, he formed the bipartisan chiefs of staff
group. This informal group meets regularly to facilitate working
relationships across the aisle. These friendships translate into
solutions instead of barriers.
The so-called Gang of 14 is a prime example, where Bob and Tom
recognized early on that common ground on Federal judges was more
favorable than Senate gridlock. Just a few weeks later, 14 Senators,
including myself, struck a deal that enabled the Senate to move forward
with the judicial nominations and conduct regular business. That is the
type of unseen influence Bob Russell has had on this place for the last
7 years.
I love Bob and I trust him. He is a good family man and he is a good
Southern Baptist. On many Mondays, we would come in and say: Tell me
about your sermon on Sunday. I will miss his presence and his insights.
He has been a good mentor and adviser to me and to many on my staff and
has made many lifelong friendships here in Washington. He is more than
a chief of staff, he is my friend.
Frank Broyles is an Arkansas hero, well-loved for coaching the
Razorbacks to a national championship and famous for developing
assistant coaches. One of his players was Jimmy Johnson, who would
later coach as an assistant at Arkansas under Broyles. It is tough to
let an assistant coach go, but when he is that good, he deserves to go
out and do great things on his own. I feel the same way about Bob,
especially since I know that Ecclesiastes says:
For everything there is a season, and a time for every
matter under Heaven.
Johnson went on to win a national championship and two Super Bowls. I
know Bob will go on to a highly successful career in his own right.
The PRESIDING OFFICER. The Senator from Texas is recognized.
Mrs. HUTCHISON. Mr. President, I rise to speak in opposition to the
nomination of the Honorable Ben Bernanke to be Chairman of the Board of
Governors of the Federal Reserve System.
I am somewhat conflicted about Dr. Bernanke's nomination for a second
term as Chairman of the Federal Reserve. Our Nation's economy is still
reeling from a significant downturn, during which home values plummeted
and foreclosures rapidly increased, wreaking havoc on our financial
system. Markets tumbled, banks and businesses failed, and millions of
jobs were lost. Ultimately, the American people have borne the brunt of
this recession, watching jobs, homes, and life savings vanish, while
seeing their hard-earned tax dollars bail out the bad actors that
caused it.
That being said, the financial crisis could have been worse. It could
have turned into a depression. So far, we are not there. I believe some
of what Dr. Bernanke did was good. He is an expert on the Great
Depression. He unleashed an arsenal of financial tools to combat the
recession, he tried to inject liquidity into the financial sector, and
did much to try to keep our markets afloat. While I commend him for
that, I am very concerned about some of the precedent that has been set
in this crisis.
I am especially troubled by the continuing expansion of TARP. Almost
immediately after its passage, the Treasury Department deviated from
the intent of the program. Instead of
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purchasing troubled assets, which we were told would be the purpose,
the Treasury purchased equity stakes in over 300 of our Nation's
financial institutions. It expanded the TARP to nonfinancial companies,
pouring billions into AIG, General Motors, and Chrysler.
We must begin the effort to wind down TARP. With banks paying back
their TARP receipts, we need to unwind TARP and pay down the deficit.
Although some have suggested TARP is a revolving fund, the legislation
was never sold as such--not ever. Americans are tired of excessive
spending. If there is anything we ought to do right now, it is to stop
spending TARP and stimulus funds that are not allocated and show the
American people we have heard the message in Washington.
TARP was designed as a one-time injection of assistance to prevent
financial institutions from collapsing and taking down the larger
economy. Now that those financial institutions have gained their
footing, we should pay back the American taxpayer. In bailing out our
Nation's financial system and large banks, we have left the very real
impression that no bank is too big to fail. This policy has allowed
those who contributed to bringing our economy to its knees to right
their ship at taxpayers' expense. It has helped these institutions
access cheap capital from the government, adversely affecting safe and
sound institutions such as community banks.
I am also concerned about the path our country is on in our recovery.
In September, Chairman Bernanke said our recession was over. While our
economy may be recovering, many Americans do not see it. At 10 percent,
our national unemployment is still extraordinarily high, despite huge
spending measures such as the stimulus package, which was supposed to
create jobs. The debt and deficits our Nation has incurred over the
past 2 years has sent our Nation's debt on an unsustainable trajectory.
Our debt is at $12.394 trillion. Earlier today, the Senate voted to
once again raise the ceiling by an astonishing almost $2 trillion, the
fifth time to do so in 18 months.
Under Chairman Bernanke's leadership, I do not think the Fed has paid
enough attention to--nor has he talked enough about--the mounting debt
and the immense burden it is going to place on our economy today and
certainly on our children and grandchildren.
Fiscal sustainability is not on the horizon. Instead, we see endless
spending as far as the eye can see: health care reform, cap-and-trade
energy legislation, a possible second stimulus. All will be huge
government programs which will not only raise our government spending
but raise costs on individuals and businesses in the form of new taxes
and mandates. I am concerned about the consequences this increase in
spending will have on our economy.
I will not support Chairman Bernanke's nomination. I am conflicted,
as some of the things he did were good, but his actions to save our
economy have helped set a very dangerous precedent for the future. The
precedent of massive spending is not the answer.
I will continue to examine the Fed's exit strategy and will most
certainly encourage further action from Chairman Bernanke on our debt
and our Nation's finances.
I yield the floor.
The PRESIDING OFFICER. The Senator from New York is recognized.
Mr. SCHUMER. Mr. President, I ask 4 minutes be taken from the
Democratic side's time?
Mr. DODD. That is fine. I know the Senator from North Dakota had
asked to be heard.
Mr. SCHUMER. I thought I was next.
Mr. President, it was only a little over a year ago, with the
collapse of Lehman Brothers, that we faced a financial crisis the likes
of which few have seen in our lifetime. We were truly standing on the
edge and staring into the abyss. For all intents and purposes the
financial system was on the cusp of a total breakdown. A Great
Depression loomed.
Now, a year later, while we cannot diminish the very real and large
problems that remain in front of us, we did succeed in preventing the
catastrophe that seemed very possible if not probable in the fall of
2000. Nobody was more important in preventing the collapse of the
financial system and the rescue of the economy from what looked like
imminent freefall than was Chairman Bernanke.
I was there at many of the meetings, and I saw his steady hand and
guidance. That is why I am going to vote to reconfirm him as Chairman
of the Federal Reserve Board.
The Fed certainly made mistakes in the runup to the financial crisis:
failing to use its regulatory authority to rein in a skyrocketing
credit boom, failing to adequately fulfill its responsibility to
protect consumers from predatory lending practices in mortgages and
elsewhere, and allowing too risky activities with too little
protection.
While most of these policies began under the previous Chairmen,
Chairman Bernanke presided over the Fed and continued them. That is
something I am sure he is not proud of, but he has acknowledged that he
has many lessons to learn from the crisis and he is working hard to
make sure the same mistakes are not repeated in the future.
I also want to say a word about the consequences of failing to
reconfirm him. Our economy, while struggling to return to solid ground,
remains fragile. Unemployment is way too high. We have yet to turn the
corner on sustained job growth. Businesses, small and large, are still
having a hard time getting access to credit they need to expand and
grow, or even, in many cases, doing business as usual.
Singling out Chairman Bernanke and the Fed for punishment might be
temporarily satisfying for some, but it will not help a single business
add jobs. It will not prevent a single homeowner from being kicked out
of his or her house. Instead, it will accomplish just the opposite. By
sending a message that the Federal Reserve and its monetary policy
decisions are under the thumb of Congress, businesses will be faced
with the prospect that the Fed might not be able to do what is
necessary for the economy because of pressure from Congress.
Economists tell us one of the major things holding the economy back
is uncertainty about the policies that Washington will pursue. This
would exacerbate that concern and create a very bad outcome for the
economy and the country. I have said it before, and I will say it
again: If you don't like monetary policy when the Fed does it, just
wait until the politicians get their hands on it.
I am going to vote to reconfirm Chairman Bernanke as Fed chairman,
and I urge my colleagues to do the same.
I yield the floor.
The PRESIDING OFFICER. The Senator from Arizona is recognized.
Mr. KYL. Mr. President, when I think of what a Federal Reserve
Chairman is supposed to do, I think of two key responsibilities:
maintaining stable prices and keeping our dollar strong. Unfortunately,
Chairman Bernanke's Federal Reserve has not performed well on either
count.
Consumer inflation, as measured by the Bureau of Labor Statistics,
increased 2.9 percent from June to December 2009.
Manufacturers' cost of production is up 4.4 percent versus last year;
up 5 percent in the past 6 months; and up 9.5 percent in the past 3
months.
Other measures of inflation, such as the 5-year, 5-year forward,
clearly show an accelerating trend. Inflation is the last thing our
economy needs right now.
As for the dollar, during the last year, its value dropped more than
10 percent. Much of this weakness is attributable to the Federal
Reserve setting short-term interest rates at virtually zero.
As such, gold prices have surged, as investors worry that the dollar
is no longer a reliable store of value.
OPEC has contemplated designating oil in a currency other than the
dollar, and foreign economists have suggested that we issue our own
government debt in yen, euros, or yuan, rather than dollars.
While neither of these actions is likely, it is clear that the
Federal Reserve needs to pay greater attention to the dollar's value
when making monetary-policy decisions. The preeminence of the dollar is
synonymous with American prestige abroad. Nothing represents our
Nation's soft power more than its strength.
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Another chief concern of mine is that, during Chairman Bernanke's
tenure, the Federal Reserve and other banking regulators showed an
inability to use bank examinations to distinguish between good and bad
loans.
Before the housing crisis, banking regulators were permitting
financial institutions to lend to individuals who obviously did not
have the ability to repay the money they borrowed. Had they been more
vigilant, the crisis may have been less severe.
Now, however, in seeking to be more cautious, bank regulators are
making another mistake: They have been telling institutions in my home
State of Arizona, and throughout the country, not to make loans to even
the most creditworthy individuals and businesses.
I have heard numerous stories, from both lenders and borrowers in my
State, about bank examiners deciding to downgrade a performing loan
because, on paper, the underlying collateral was worth less than its
purchase price.
As a result, the banks had to either raise more money, which is
incredibly difficult, or else the borrower had to contribute more cash
to keep from technically defaulting on the loan.
Why would we have policies that punish responsible borrowers? Why
would it be in our interest to force those who are current on their
loans into a situation that could lead to bankruptcy? Doing so makes a
bad situation worse and creates problems that ripple through our
economy.
I am also troubled that Chairman Bernanke refuses to take
responsibility for the housing bubble and disputes that the Federal
Reserve's lax monetary policy helped create it.
As the respected columnist Bob Robb of the Arizona Republic recently
explained:
[Chairman] Bernanke is intellectually shadow boxing. . . .
When a bubble occurs in a commodity which is almost
universally purchased using extensive borrowing, such as
homes, it's fatuous to claim that easy money doesn't play a
significant role.
Chairman Bernanke strongly supported this lax monetary policy, and he
should own up to its role in the financial crisis.
These are all reasons to oppose his renomination or confirmation.
Nonetheless, I must vote to reconfirm Chairman Bernanke, simply because
I am concerned that another nominee chosen by President Obama would be
less independent than Chairman Bernanke and would direct the Federal
Reserve's resources to support the administration's policy interests,
and, therefore, bypass congressional approval for appropriated funds.
This administration has a history of nominating partisan, out-of-the
mainstream individuals for key jobs, and replacing Chairman Bernanke
would be another opportunity for it to do so.
I would hope that if Chairman Bernanke is confirmed, he will take
action to remedy the problems I have just addressed. They demand his
attention.
The PRESIDING OFFICER. The Senator from North Dakota is recognized.
Mr. CONRAD. Mr. President, I rise in support of the confirmation of
Mr. Bernanke to continue as Chairman of the Federal Reserve. I do so,
acknowledging that he contributed to the crisis, but also recognizing
that without his strong leadership the crisis might have become a
conflagration.
How did we get to the brink of financial collapse? I might say to
some of my colleagues, they should look in the mirror because they,
too, contributed to the forming of the bubble. How? An overly loose
fiscal policy under the control of the Congress and the administration.
The previous administration ran up massive deficits, doubled the
debt. That is a loose fiscal policy. It was accompanied by a loose
monetary policy after 9/11.
After 9/11, the Federal Reserve kept interest rates very low, flooded
the system with money, and the combination of an overly loose fiscal
policy and an overly loose monetary policy created the seed bed for
bubbles to form. Indeed they did.
We didn't just have a housing bubble, we had an energy bubble--oil
prices went to $100 a barrel. We had a commodity bubble--wheat went to
more than $20 a bushel. These are examples and evidence of bubbles
being formed. When you have an overly loose monetary policy and an
overly loose fiscal policy, bubbles are going to form and ultimately
bubbles burst. When they do, there is enormous economic wreckage. That
is what has occurred here--all of it coupled with an era of
deregulation.
Under the previous administration--and, yes, the Federal Reserve has
responsibility here as well--there was too little regulation of major
financial institutions and of major financial instruments. Trillions of
dollars of derivative instruments were floating around the world
unregulated, even unrecorded. Of course there was danger there.
Warren Buffett warned that derivatives constituted a nuclear time
bomb hanging over the global economy. Ultimately the bubbles burst, and
ultimately the economic wreckage built. Bernanke bears some
responsibility for that, without doubt. But once the crisis developed
he took charge in a way that is unprecedented. He took step after step
to provide liquidity to this global economy to prevent and avert a
collapse.
I believe when the history of this period is written, in terms of the
response to the dangerous cloud hanging over this global economy,
Bernanke will prove to have been one of the heroes of the piece. In
instance after instance, he took unprecedented action to avert a
collapse.
His academic study was the Great Depression.
He resolved as a young man to do everything he could to prevent any
future collapse of that magnitude. He proved to be the right man at the
right time. He deserves to be confirmed in this vote this afternoon. I
ask my colleagues to please be judicious. Let's recognize that he made
serious mistakes. Let's also admit the Congress and the administration,
the previous administration, made very serious mistakes: overly loose
fiscal policy, overly loose monetary policy, a lack of regulation, the
creation of bubbles, bubbles that burst that created enormous wreckage.
But Ben Bernanke helped avert a global financial collapse. I believe
history will prove that is the truth.
I yield the floor.
The PRESIDING OFFICER. The Senator from Rhode Island is recognized.
Mr. REED. Mr. President, I join my colleague, the Senator from North
Dakota, in rising to support the confirmation of Chairman Ben Bernanke
to a second term as Chairman of the Federal Reserve. As has been
pointed out throughout the course of this debate, his position at the
Federal Reserve prior to September 2008 gave him the opportunity and
the obligation to look carefully at a building crisis.
His response was not as perceptive or as adroit as we all in
hindsight would wish to see. He did recognize, however, by August of
2007 that this economy was slowing down, and he applied the traditional
macroeconomic tools by beginning to lower the interest rate.
By December of 2008, the interest rate was virtually zero, the
Federal rate. That has helped, I think, keep the economy moving and has
helped us move forward. But the point that so many of my colleagues
have made is when it came to critical moments during the fall of 2008,
Chairman Bernanke understood the problem and was able to use
extraordinary measures, first persuading the Federal Reserve to follow
his lead, and then using extraordinary measures to begin to blunt the
worst effects of this economic crisis we faced, and continue to face,
and his efforts to ensure that there was liquidity in the system--
precisely what was done incorrectly in 1929, 1930 through the early
1930s, where the Federal Reserve pulled back, accelerating the
depression rather than cushioning the economy from further decline.
He took innovative steps that seem sort of esoteric, but helped
restore stability in capital markets. But he also took very decisive
intervention with respect to the money market mutual funds, when the
Reserve Fund broke the buck, as they say, when its net asset value
dropped below a dollar, there was a tremendous sense of not only
uncertainty but potential chaos as everyone was plotting to withdraw
their funds from money markets, which would have created huge problems
and which would have affected every American in this country. But he
moved decisively and aggressively,
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along with the Treasury Department, to provide stability and support.
He also helped create programs like the TALF program to restart markets
for auto, home, credit card, student loan, and small business loans,
his ability to interject liquidity into the system, gave us a break, if
you will, from a rapidly deteriorating situation.
I sense, and my colleagues have said, that in the future his
reaction--calm, decisive, innovative, imaginative--was one of the
things that prevented this catastrophic situation from becoming even
worse. That is an important aspect that we must consider in regards to
his renomination.
There is something else too. If the Chairman is not confirmed, there
will be a period of uncertainty as to who is leading the Federal
Reserve and what direction will it take. The last thing we need today
is uncertainty in our economic future. If the ability of individuals
and institutions to invest, to commit their capital and their effort
and their work is put on hold, then the progress we have seen--and it
is not sufficient but we have seen some--in fact, there are
expectations that the reports on gross domestic product tomorrow will
show significant increases rather than significant contractions, which
is what is what we saw under the last administration.
But if we inject this uncertainty, if we go months and months with no
one clearly in charge at the Federal Reserve, it will have a very
tangible, rapid, and unfortunate effect on our ability to move forward
with the economy.
There is another issue here I think that is important to note. That
other issue is that, having done all of these remarkable innovative
programs to increase liquidity, to keep the engine of the economy
running, albeit not at the level and speed and power we might want, but
keep it moving, at some point those programs have to be unraveled,
pulled back, because we will face another danger.
We face a danger, perhaps, in terms of inflation rate effects. We
face a danger in terms of currency issues, in terms of value of the
dollar. This is something we all recognize, this great pivot, as I call
it, moving away from low interest rates and liquidity infusion, to
higher interest rates, the dismantling of some of these programs. For
example, the Fed already announced that it intends to begin to slowly
get out of its support for the mortgage market in a few weeks.
All of that has to be as tacitly managed, as carefully understood, as
these programs were in the fall of 2008 and 2009 when the Chairman was
moving forward. As a result, I think we need someone who understands
these programs, and understands them not just theoretically but
literally from trial and error, from understanding what worked, what
did not work, what the consequences are.
No one has that type of knowledge and insight at this juncture other
than Chairman Bernanke. He is, of course, as an individual, a man of
remarkable integrity and character who is committed to public service,
and who is a pragmatist, not an ideologue, someone who will continue to
provide not only guidance but leadership at a place we sorely need it,
at the Federal Reserve. From my talks with Chairman Bernanke, I think
he understands that people are hurting, and that his role in getting
our country back to full employment is just as important as his role in
monetary policy. The engines of our economy are small businesses and
jobs, and this is what people in my state of Rhode Island expect from
the Federal Reserve. At this critical juncture, I hope that my
colleagues will support Chairman Bernanke for a second term.
I yield the floor.
Mr. AKAKA. Mr. President, I support the confirmation of Chairman Ben
Bernanke. Chairman Bernanke has demonstrated tremendous skill in
handling extraordinary economic challenges. We were very fortunate that
the Chairman of the Federal Reserve Board of Governors during the
economic chaos last fall was an individual whose area of academic
expertise is the Great Depression. The Federal Reserve took
unprecedented emergency actions that helped stabilize the economy and
prevent further collapse of the financial markets.
During my first meeting with the Chairman, he shared with me his
experience as a school board member of trying to improve the
availability of financial education. I have always greatly appreciated
Chairman Bernanke's dedicated efforts to improve the financial literacy
of students and consumers. The true costs of financial illiteracy have
been made all too apparent by the financial crisis. One of the core
causes of the crisis was that families were steered into mortgages with
risks and costs they could not afford or even understand. Chairman
Bernanke and I share a firm commitment to trying to improve the lives
of working families through improved consumer protections and financial
literacy.
Chairman Bernanke has led efforts at the Federal Reserve to better
protect and inform consumers. During Chairman Bernanke's tenure, the
Federal Reserve has increased consumer protections in the subprime
mortgage market and limited questionable practices in the broader
mortgage market. Additionally, the board has proposed further
limitations on loan originators, brokers, and loan officers.
Also during Chairman Bernanke's tenure, the Federal Reserve developed
improved rules to restrict credit card practices, enhance overdraft fee
disclosures, strengthen student loan disclosures, and restrict gift
card fees.
I have also greatly appreciated the efforts of Chairman Bernanke and
the Federal Reserve to promote the use of financial institutions for
lower cost remittances. Too often consumers fail to take advantage of
lower cost remittance services found at banks and credit unions.
Remittances can be helpful in providing opportunities for the unbanked
to utilize mainstream financial institutions.
I look forward to continuing to work with Chairman Bernanke and the
Federal Reserve to better protect, educate, and empower consumers.
Mr. LEVIN. Mr. President, we have been asked by the President to
confirm Ben Bernanke to a second term as Chairman of the Federal
Reserve. Given the current state of the economy, and the nature of the
crisis that led to the recession from which we are struggling to
recover, this request has generated a great deal of controversy. I am
conflicted by this nomination, and I want to explain my decision to
support it.
The most striking feature of the economic crisis is that it was, to a
large extent, a collective failure of financial regulation. It was not
a function of the normal waxing and waning of the economic cycle.
Instead, our financial institutions engaged in ever-more complex,
highly dubious, and risky transactions, and when the risk was exposed,
it set off a chain reaction that dragged down our entire economy.
The lack of adequate financial regulations was a major cause of the
crisis. We must reform that system on an urgent basis. Consumers'
rights need to be protected.
But in addition to the failures of the system, part of the crisis was
made possible by collective failures of those entrusted to oversee the
financial system. Chairman Bernanke was one of those people. He and
others should have been more forceful in reining in the greed-driven
abuses and excesses of our financial sector.
Some of my colleagues who share this view believe that this fact
alone should justify a ``no'' vote on Chairman Bernanke. But I believe
that we must weigh both Chairman Bernanke's role and actions before the
crisis, but also those since the crisis began. In other words, was he a
bigger part of the problem or the solution?
First, while Chairman Bernanke should have acted more forcefully to
try to prevent the crisis, most of the abuses that brought it about
occurred in areas outside the Federal Reserve's primary areas of
oversight. I also believe that Chairman Bernanke's and the Federal
Reserve's recent support for enhanced financial regulation are crucial
to correcting some of the structural failures that lead to the crisis.
Second, the Federal Reserve's actions helped to prevent this tragic
recession from becoming a second Great Depression. This is no small
thing. As bad as the last several months have been, they would have
been even worse but for Chairman Bernanke's leadership.
Lastly, it is clear that Chairman Bernanke's role in preventing a
deeper crisis has earned him some confidence in our financial markets.
A defeat of
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his renomination carries the risk of shaking these markets, at the very
moment we need them to operate in a stable fashion so as to help boost
our fragile economic recovery.
When making the decision of whether to support this nomination, I end
up believing that Chairman Bernanke's performance in addressing the
economic crisis and his current efforts to significantly enhance
financial regulation to help prevent future crises, outweigh his past
mistakes. On balance, I believe that Chairman Bernanke should be given
the opportunity to continue to help pull us through this difficult
period, and I will vote in favor of his confirmation.
Mr. GRASSLEY. Mr. President, I want to express my concern about the
nomination of Ben Bernanke as Chairman of the Federal Reserve Board and
explain why I will vote against him when the Senate has the opportunity
this week.
I know many of my colleagues will support Mr. Bernanke because he was
a cocaptain of the U.S. economic recovery efforts in the last year and
a half. Appointed by President Bush, Mr. Bernanke undoubtedly has a
difficult job. Our Nation has been jolted by greed, corruption, fraud,
and excessive risk-taking that led to the largest taxpayer bailout in
history. Mr. Bernanke was holding the reigns, along with officials in
the Department of the Treasury, but steered us into an out-of-control
spending frenzy with very little oversight by the American people.
Ben Bernanke has been wrong about the economy. He was wrong about the
subprime lending meltdown. He was apparently blind to the pitfalls of
credit default swaps. He misled the American public about the purpose
and intent of the Troubled Asset Relief Program. He recklessly spent
billions of dollars on a few renegade financial firms, picking winners
and losers on Wall Street and justified these actions by saying Main
Street would be saved. Then, he stonewalled Congress from learning
about how the billions of dollars were spent. Ben Bernanke also opposed
transparency almost every step of the way.
Let me address these issues more in depth.
Whenever the Chairman of the Federal Reserve opines about the
economy, he understands that his words can be misunderstood or taken
out of context and thus have an unintended impact on the market and
day-to-day trading. However, Ben Bernanke has been saying that our
economy has been strong since the beginning of the decline. His
analysis of the situation and predictions for our future economic
growth were far off.
Let's take the housing problems, for example. In 2006, Fed Chairman
Bernanke believed that the housing market had been strong but could
cool slightly. He said, ``Our expectation is that the decline in
activity or the slowing in activity will be moderate, that house prices
will probably continue to rise, but not at the pace that they had been
rising. So we expect the housing market to cool, but not to change very
sharply.'' He didn't think the housing market would blow up, nor did he
believe that the weakness in the market would spill over to other
sectors of the economy. He was dead wrong.
He was wrong about unemployment. Most recently, in May of 2009 and in
front of the Joint Economic Committee, Fed Chairman Bernanke said:
``Currently, we don't think [the unemployment rate] will get to 10
percent.'' In November the unemployment rate hit 10.2 percent.
We can go back to February 2006. As President Bush's Chairman of the
Council of Economic Advisers, Mr. Bernanke was responsible for drafting
the Economic Report of the President which claimed the following: ``The
economy has shifted from recovery to sustained expansion. . . . The
U.S. economy continues to be well positioned for long-term growth.'' In
this report, Bernanke projected the unemployment rate to be 5 percent
from 2008 through 2011.
Even in 2007, the Fed Chairman believed that the labor market would
stay healthy and incomes would continue to rise. In February of that
year, he said that ``the business sector remains in excellent financial
condition.'' Later in July of 2007, Mr. Bernanke said, ``Employment
should continue to expand. . . . The global economy continues to be
strong. . . . financial markets have remained supportive of economic
growth.''
Then came the Bear Stearns debacle. Bear Stearns led the charge in
the securitization market. Because they had placed significant
resources in mortgage-backed securities, the company was on the verge
of collapse. In March of 2008, the Federal Reserve Bank of New York
attempted to save the company through an emergency loan, but failed and
moved to force a sale to JPMorgan Chase.
Three months later, Fed Chairman Bernanke still did not acknowledge
the pending economic crisis. In fact, in June, he said, ``The risk that
the economy has entered a substantial downturn appears to have
diminished over the past month or so.'' He couldn't have been more
wrong. The economy melted down, and the Fed and Department of the
Treasury had to come to the rescue of several failing firms.
The Federal Reserve Chairman only warned Congress about the financial
crisis when it was too late. Under his leadership, the Federal Reserve
took very little action to control the root causes that led us to
economic storm we have all had to endure. Instead, they urged Congress
and the American people to swallow a plan that was ill conceived and
risked making the situation worse.
So another reason I cannot support his renomination as Chairman of
the Board is because of the disastrous implementation of the Troubled
Asset Relief Program, also known as TARP.
Chairman Bernanke came to Congress with former Treasury Secretary
Paulson, selling a proposal that would direct taxpayer money to
purchase ``toxic assets.'' The proposal would have allowed the Federal
Government to take bad assets off the books of troubled firms to keep
credit flowing. We were told that the situation was dire. We were told
that the Fed and the Treasury Department had a plan in place. We were
told that taxpayers may even come out ahead. We were told to trust
them.
It wasn't long after the Emergency Economic Stability Act was passed
in October 2008 that the Fed and the Treasury reversed course. Without
input from Congress, they took the authority they were given and went
their own way. Chairman Bernanke was doling out funds for Bear Stearns
and AIG while the Treasury was doling out funds to firms that were
destined for failure.
Today, the Troubled Assets Relief Program has been used as a slush
fund to bail out firms on Wall Street and troubled automakers. Taxpayer
money has been enabling these companies to continue in their misguided
ways. Corporate jets were being used to lobby Congress for billions of
dollars, and CEOs resisted proposals to slim down the fat pockets of
their cronies. The American people were misled, and Ben Bernanke should
share responsibility for that.
But, it wasn't just the Troubled Asset Relief Program that was used
to funnel taxpayer money to failing firms. Chairman Bernanke led the
Fed on a spending spree, using a blank check to unilaterally direct
money to AIG, Fannie Mae, and Freddie Mac.
Chairman Bernanke was AWOL as the Federal Reserve funneled billions
of taxpayer dollars to AIG knowing that the money would go directly out
the back door to AIG counterparties like Goldman Sachs and foreign
banks. AIG's payment of 100 cents on the dollar for the counterparty
securities meant Goldman actually received more than some other
counterparties, because Goldman's securities had a market value of 40
cents on the dollar while UBS Bank's securities, for example, were
worth 71 cents on the dollar.
Chairman Bernanke was absent from the critical ``haircut''
negotiations with the AIG counterparties, in stark contrast to the TARP
Capital Purchase Program negotiations weeks earlier. As a consequence,
no reductions in counterparty payments were obtained for the American
taxpayer. These negotiations failed despite the fact that some of the
foreign counterparties offered to reopen negotiations. The Federal
Reserve failed to capitalize on this opportunity and investment bankers
were paid in full.
The AIG bailout was designed by the Fed in a manner that funneled
billions of dollars directly to the counterparties. No other outcome
was possible.
[[Page S307]]
The effect was a ``backdoor bailout'' regardless of the Fed's now-
stated intent merely to improve AIG's liquidity in order to avoid a
collapse.
Reasonable people can disagree about whether Chairman Bernanke made
the right decisions. Aside from the problems I have already outlined, I
have serious reservations about voting for him again given his
resistance to transparency. For example, we have seen very little
cooperation from the Federal Reserve to ensure that the Government
Accountability Office, GAO, has independent audit authority.
Last March, the GAO testified before the Finance Committee that the
Federal Reserve was resisting its efforts to conduct oversight of the
response to the financial crisis by citing provisions of law that were
intended to maintain the independence of monetary policy.
Such restrictions could be defended when the Federal Reserve focused
only on monetary policy. However, since the financial crisis, the
Federal Reserve has routinely exercised extraordinary emergency powers
to subsidize financial firms far above the levels Congress is willing
to authorize through legislation. The Federal Reserve took on enormous
amounts of risk in complicated and unprecedented ways. That risk is
ultimately borne by the American taxpayer. Congress authorized $700
billion in funds under TARP. However, the total projected assistance in
various initiatives by the Federal Reserve could be up to $3.4 trillion
by GAO estimates.
Therefore, I introduced an amendment in May of last year that would
have guaranteed GAO the authority to audit all of the extraordinary
emergency assistance from the Federal Reserve. Regrettably, due to
objections from the Federal Reserve, my amendment had to be watered-
down to ensure that GAO received at least some of the additional
authorities it needed.
Although I would have preferred to make all of the Fed's emergency
actions under section 13(3) subject to GAO audit, I agreed to limit my
amendment to Fed actions aimed at specific companies like Bear Stearns
and AIG. However, broader, more comprehensive oversight authority over
the Federal Reserve is needed to ensure the kind of transparency and
accountability the American people expect. Unfortunately, when the
opportunity to embrace that sort of oversight was presented, the
Federal Reserve hid behind concerns about the independence of monetary
policy to maintain the secrecy of its operations.
Another example of the Federal Reserve resisting attempts to shine
light on their actions surrounds the ``back-door bailout'' of Goldman
Sachs and major foreign banks through the aid to AIG. The Federal
Reserve initially refused to disclose the identity of the banks to whom
AIG paid out the vast majority of its Federal assistance. Federal
Reserve lawyers even opposed AIG disclosing details of its transactions
in public filings required by the Securities and Exchange Commission.
The Federal Reserve argued that disclosing the identity of these
counterparties who engaged in exotic, risky transactions with AIG would
destabilize AIG, would harm the private business interests of the
counterparties, and could affect the stability of the markets as a
whole. However, following significant public and Congressional
pressure, the identities of the counterparties were released, and we
learned that French bank Society General and Goldman Sachs were among
the largest beneficiaries of the Federal bailout of AIG. None of the
horrible consequences the Federal Reserve used to oppose basic
transparency came to pass. The sky did not fall.
The Special Inspector General for TARP has launched an investigation
into whether there was misconduct at the Federal Reserve in regard to
the Fed's role in the failure of AIG to disclose billions of dollars in
counterparty payments to the SEC last year. And just this week, the
Special Inspector General announced that it is investigating the
Federal Reserve for withholding documents from the Special Inspector
General in connection with his audit in November 2009 of the AIG
counterparty payments. The Special Inspector General learned that they
did not receive all of the documents they requested from the Federal
Reserve when they saw the documents produced last week under subpoena
to the House Committee on Oversight and Government Reform for the
Committee's January 27, 2010, hearing. This sort of stonewalling by the
Federal Reserve is outrageous and cannot be tolerated.
So, I have had to ask myself, Is Ben Bernanke the man to lead us
forward?
Chairman Bernanke didn't see the financial crisis coming. He never
expected our unemployment to reach 10 percent. He didn't foresee the
subprime housing market affecting the broader economy. He didn't expect
complicated financial instruments like credit default swaps to pose a
risk to the economy, even though they were considered by some to be
``financial weapons of mass destruction.'' In fact, Chairman Bernanke
insisted only well-informed and intelligent minds were using such
instruments and that government supervision wasn't necessary.
This lack of foresight makes me wonder if he is ready to lead our
economy down the path to a sustainable recovery.
I am afraid Ben Bernanke thinks everything is under control. He
steered our economy out of danger. But we still have a long road ahead
of us. The Fed has to unwind its massive balance sheet. It has to
remove the excess funds that were created to paper-over the financial
sectors' unacknowledged losses without stoking the flames of inflation.
We need a Fed Chairman that is committed to a strong dollar and low
inflation. We need a Fed Chairman that is committed to transparency.
I am afraid Ben Bernanke had a seat at the table during the
development of our current economic and financial crisis. He has failed
to learn its lessons. He has promoted a policy of easy money, inflating
our way from a stock market bubble to a housing bubble. He neither
predicted nor prepared for the inevitable results. Moreover, he seems
determined to repeat the mistakes of the past.
For these reasons, I cannot support his nomination by President Obama
to serve a second term as Chairman of the Fed.
Mr. CORNYN. Mr. President, I would like to explain why I will vote
against the confirmation of Ben Bernanke for a second term as Chairman
of the Federal Reserve. Ben Bernanke is a brilliant and honorable man.
He deserves our Nation's thanks for his years of public service--
especially during the greatest financial crisis in decades. I agree
with Chairman Bernanke's supporters that some of his actions mitigated
that crisis--and that we might be in a much worse place today if not
for his leadership. Nevertheless, I believe the Federal Reserve needs a
fresh start--with a new Chairman--for several important reasons.
First, Chairman Bernanke was a member of the Fed's Board of Governors
where he strongly supported Chairman Greenspan's monetary policy that
kept interest rates very low. In fact, the Federal funds target rate
reached a low of 1 percent by mid-2003. Most economists agree that
these low interest rates were one of the factors--certainly not the
only factor--that contributed to the housing price bubble that expanded
for much of the previous decade. And when the housing bubble burst, our
global financial crisis began. This isn't ancient history. Earlier this
month, Chairman Bernanke delivered a remarkable speech to the American
Economic Association in Atlanta. In that speech he defended the Fed's
actions before the crisis--and largely absolved himself of any
responsibility for it. Now I am willing to support a person who makes
tough decisions--and learns from them when things don't go well. But
under Chairman Bernanke, the Federal Reserve missed the signals that
the economy was in trouble--such as the housing bubble, and unsettled
credit markets. The Fed missed the chance to take action sooner--action
that might have prevented the necessity of its massive intervention
later on. And today, Chairman Bernanke still does not recognize the
missed opportunities that occurred on his watch.
Second, Chairman Bernanke played a role in the passage of the
Troubled Asset Relief Program--or TARP. It is important to remember
what Chairman Bernanke and Treasury Secretary Hank Paulson were telling
us before we all voted on TARP in October 2008. In public, their
testimony was alarming. On September 23, 2008, Secretary Paulson said
that Congress must act ``in order to avoid a continuing series
[[Page S308]]
of financial institution failures and frozen credit markets that
threaten . . . the very health of our economy.'' Chairman Bernanke was
one of those who told us--in effect--that we were perhaps days away
from a complete meltdown of our financial system. So a lot of us did
our patriotic duty. We trusted the experts and we authorized the TARP
program. And almost immediately after we did so, the Treasury changed
what they said they were going to do with the money. Only weeks after
TARP was enacted, the Bush administration abandoned the goal of
purchasing ``toxic assets.'' Instead, they funneled billions of
taxpayer dollars directly to many of the Nation's largest financial
institutions. Soon the Federal Government was acquiring ownership
stakes in banks, financial institutions and automakers--with the full
support of the incoming Obama administration. In fact, the Obama
administration has gone even further, using its TARP leverage to set
executive pay at several companies. And during the reorganization of
General Motors, the Obama administration used its leverage to benefit
its union allies--over the rights of secured bondholders who had loaned
their savings to the company. TARP may have also enabled public
corruption and criminal activity. According to the latest report from
TARP's inspector general Neil Barofsky, there are 54 ongoing criminal
and civil investigations into TARP related activities. These activities
include: ``complex issues concerning suspected TARP fraud, accounting
fraud, securities fraud, insider trading, bank fraud, mortgage fraud,
mortgage servicer misconduct, fraudulent advance-fee schemes, public
corruption, false statements, obstruction of justice, money laundering,
and tax-related investigations.'' President Obama and the Senate
leadership have resisted our attempts to end the TARP program. Last
week, 45 Democrats voted down Senator Thune's amendment which needed a
60-vote threshold to end the TARP program. And last night, President
Obama proposed using TARP to fund his new stimulus bill--in order to
get around his own 3-year spending freeze. By the way, using TARP on
new spending would also break the promise that the President made when
he voted for TARP in this very Chamber. Then-Senator Obama said:
[I]f American taxpayers are financing this solution, then
they have to be treated like investors. They should get every
penny of their tax dollars back once the economy recovers.
Mr. President, TARP is a government credit card that should be
cancelled. And Chairman Bernanke was one of the key enablers that led
to its creation in the first place.
Third, I believe we need a Fed Chairman who demonstrates a greater
commitment to transparency. The Federal Reserve has been very resistant
to giving the Government Accountability Office, GAO, independent audit
authority. In fact, the GAO told the Senate Finance Committee last year
that the Federal Reserve was resisting its investigation efforts in
reviewing the response to the financial crisis by claiming that it
would impair the independent nature of monetary policy. I agree that
politics should not be involved in monetary policy. Yet since the
beginning of the financial crisis, the Federal Reserve has routinely
exercised unprecedented, emergency powers that resulted in a $3.4
trillion expansion of its balance sheet according to some estimates.
This is risk that will be borne by the American taxpayer and they
deserve to know what their government is doing. Another example of the
Federal Reserve resisting transparency surrounds the assistance
provided to AIG. The Federal Reserve initially refused to disclose the
identity of the banks to whom AIG paid out the vast majority of its
Federal assistance. They even opposed AIG disclosing details of its
transactions in public filings required by the Securities and Exchange
Commission. The Federal Reserve argued that disclosing the identity of
these counterparties who engaged in exotic, risky transactions with AIG
would destabilize AIG, would harm the counterparties, and could
destabilize the market as a whole. However, following significant
public and congressional pressure, the identities of the counterparties
were finally released and the market moved forward. The inspector
general for TARP is now investigating into whether there was misconduct
at the Federal Reserve in regard to its role in the failure of AIG to
disclose billions of dollars in counterparty payments to the SEC last
year. And just yesterday at a hearing by the House Committee on
Oversight and Government Reform, the TARP inspector general announced
that additional documents and facts have come to light that have caused
them to initiate an investigation to review the extent of the Federal
Reserve's cooperation during the course of its audit of the AIG
counterparty payments. Clearly, the Fed needs more transparency, not
less. That is why I am a cosponsor of the Federal Reserve Sunshine Act
of 2009. This bill would require the GAO to conduct a comprehensive
audit of the Federal Reserve System and its banks and report back to
Congress by the end of 2010. But in addition to an audit, the Fed
clearly needs a new Chairman--one more clearly committed to
transparency and accountability.
Supporters of Mr. Bernanke argue that to vote against him will
politicize the Federal Reserve. I could not disagree more. An up-or-
down vote is part of our responsibility as Senators to provide our
advice and consent. Some supporters also argue that we could wind up
with someone worse than Mr. Bernanke--and that any transition would
unsettle financial markets. On this point, I would contend that the
current uncertainty job-creators face today is due to the policies
being pushed by this administration; this is the main obstacle to
building confidence and growing jobs for Americans. But again, the
Senate will have the opportunity to provide its advice and consent to
any future nominee. And if Chairman Bernanke's term expires, Vice
Chairman Donald Kohn would immediately assume his duties. And Mr.
Bernanke would still remain on the Fed's Board of Governors. So the
supposed ``transaction costs'' of voting down this nomination are
overstated, in my opinion. The simple truth is: No one person is
indispensible in any public office. I believe the American people and
our financial system will be better served by new leadership at the
Fed. And therefore I will vote against this nomination.
Mr. SPECTER. Mr. President, I have decided to oppose the renomination
of Chairman Ben Bernanke. I do so with reluctance because I admire his
record of academic and professional achievements.
My sense of admiration and the fact that I like him has to be weighed
in the broad context of his work as Chairman and what the American
people have a right to expect on results and accountability. The
Federal Reserve is given great authority and commensurate
responsibility on regulation and oversight of our financial
institutions. Accountability frequently is hard to pinpoint; but it can
be established in the upheaval of the financial institutions in the
past months and years. The consequences of foreclosures ousting
thousands from their homes, millions of job losses and billions of
losses in pension accounts weigh heavily on those responsible for
regulation and oversight of U.S. financial institutions. These problems
are traceable in large part to the national housing boom bubble.
The October 27, 2005, edition of the Washington Post reported
Chairman Bernanke's testimony that he was not concerned that the
national housing boom was a bubble that was about to burst. In
testimony before Congress's Joint Economic Committee, he testified that
the rise in U.S. house prices by nearly 25 percent over the past 2
years largely reflected strong economic fundamentals such as growth in
job incomes and the number of new houses. He did not agree with the
judgment of many economists that house prices had risen too far too
fast in many markets, forming a bubble that could rapidly collapse and
trigger an economic downturn.
The Washington Post December 21, 2009, edition reported the following
:
In January 2005, National City's chief economist had
delivered a prescient warning to the Fed's board of
governors: An increasingly overvalued housing market posed a
threat to the broader economy, not to mention his own bank
and others deeply involved in writing mortgages. The message
wasn't well received. One board member expressed particular
skepticism--Ben Bernanke. ``Where do you think it will be the
worst?''
[[Page S309]]
Bernanke asked, according to people who attended the meeting,
one in a series of sessions the Fed holds with economists.
``I would have to say California,'' said the economist,
Richard Dekaser. ``They have been saying that about
California since I bought my first house in 1979,'' Bernanke
replied. This time the warnings were correct, and the
collapse of the California real estate market would bring
down the nation's fourth-largest bank, the largest casualty
of the financial crisis.
My opposition to Chairman Bernanke is also based on his role, along
with then-Secretary of the Treasury Henry Paulson, in pressuring
Kenneth L. Lewis, CEO of Bank of America, to have the Bank of America
complete its acquisition of Merrill Lynch despite the discovery of
Merrill's losses without disclosing Merrill's financial problems to its
shareholders prior to a proxy vote to approve the deal.
Chairman Bernanke has also not won the public's confidence with
respect to the Fed's commitment to job creation. No issue is more
important in America today than job creation. The Fed Chairman must
explicitly target the full arsenal of the Fed at this pressing
priority.
I have considered the concerns that Chairman Bernanke's rejection
would cause turmoil in the markets. While I regret opposing the
President on this nomination, I believe that he will fill the position
with a capable replacement who will command wide respect. I also
believe that his replacement and others with similar responsibility
will perform better with this insistence on success and accountability.
Mr. FEINGOLD. Mr. President, I have given substantial deference to
executive branch nominations made by Presidents of both parties. That
deference is greatest when the nomination is for a position closest to
the President, such as a position in the Cabinet, and at its lowest for
positions with greater independence and distance from the President.
The position to which Benjamin Bernanke has been nominated, namely to
serve another term as Chair of the Federal Reserve Board of Governors,
is among those for which appropriate deference is lower. The Federal
Reserve is famously independent.
A chief responsibility of the Chairman of the Federal Reserve is to
ensure a sound financial system. Under the watch of Ben Bernanke, the
Federal Reserve permitted grossly irresponsible financial activities
that led to the worst financial crisis since the Great Depression.
While Chairman Bernanke has certainly been instrumental in helping
the financial system recover from that crisis, we should not forget his
role in its creation. Under Chairman Bernanke's watch predatory
mortgage lending flourished, and too big to fail financial giants were
permitted to engage in activities that put our nation's economy at
risk. And as it responds to the crisis it helped to usher in, the
Federal Reserve under Chairman Bernanke's leadership continues to
resist appropriate efforts to review that response, how taxpayers'
money was being used, and whether it acted appropriately.
For those reasons, I will vote against another term for Chairman
Bernanke.
Mr. LEAHY. Mr. President, I will vote for President Obama's
nomination of Benjamin Bernanke for a second term as Chairman of the
Federal Reserve Board.
Chairman Bernanke's nomination should be examined through the prism
of how he performed during the recent financial crisis, and with full
consideration of the best interests of the American people and their
stake in the Nation's economic recovery.
It is clear that prompt and decisive action by Federal officials like
Dr. Bernanke saved the country from another Great Depression. Since the
economic meltdown in the fall of 2008, the Federal government has
committed its resources to quell the financial turmoil and stabilize
the economy. The Federal Reserve, led by Chairman Bernanke, played a
central role in these efforts. They cut interest rates early and
aggressively, reducing the target for the Federal funds rate to nearly
zero. They created targeted lending programs to restart the flow of
credit in critical markets. They worked with other agencies--like the
Treasury Department, the FDIC, and overseas central banks--to ensure
that financial institutions worldwide had access to short-term funding.
I supported these efforts to respond to the financial crisis to
prevent the country from sliding into an economic depression, which was
a very real possibility just a few months ago. Congress passed an
economic rescue bill that staved off a full market retreat, and it
enacted an economic recovery plan that is beginning to turn things
around. Through these efforts our economy has begun to show signs of
progress in recent months.
But much more is needed to jump-start our economy, and the Federal
Reserve needs to focus more on helping Main Street, not just Wall
Street. While I believe Chairman Bernanke acted wisely during the worst
of the economic crisis, he now needs to concentrate his efforts on a
broader economic recovery by helping small businesses gain access to
affordable capital to expand their markets and create more jobs. Small
businesses are the backbone of Vermont's and the Nation's economy.
During his second term, Chairman Bernanke must direct the Federal
Reserve to do more to support small business economic growth.
And with the Federal Reserve playing such a large role in the
recovery effort, the American people deserve greater transparency by
knowing the full extent of the Fed's lending programs, which is why I
have cosponsored legislation introduced by Senator Sanders to provide
for a full audit of the funds released by the Federal Reserve.
The early stages of an economic recovery are fragile--all the more
during this recovery, as we inch back from a time, unprecedented in our
lifetimes, when the United States and the world stood on the brink of
financial collapse in the fall of 2008. Economic decisions and markets
and ultimately our economy itself are unsettled by uncertainty, and the
intended or unintended effects that a sudden turnover at the Federal
Reserve would have right now on the economic recovery should not and
must not be underestimated.
When considering who would best fill important positions like
Chairman of the Federal Reserve, the President and the Senate must
ensure that Federal agencies are led by qualified and competent
officials. Chairman Bernanke has helped to steer our financial and
economic system through the worst financial storm in nearly a century.
With much work remaining, I support his nomination for another term.
Mrs. FEINSTEIN. Mr. President, I rise today to speak in support of
the reconfirmation of Ben Bernanke as Chairman of the Federal Reserve.
Mr. Bernanke has been a steady hand at the Federal Reserve during the
worst financial crisis since the Great Depression. Mr. Bernanke knows
something about that: his scholarly work as an economics professor at
Princeton University focused on the Great Depression. At a time when
our economy is climbing out of a deep recession, I believe Mr.
Bernanke's continued leadership will provide the stability that is
essential to economic recovery.
Some blame Mr. Bernanke for the financial crisis and its severity.
They believe President Obama must set an example and break with the
past by replacing him.
I do not agree.
It would be a big mistake, in my view, to jettison a man whose
expertise and experience have been crucial to rescuing our economy, and
I believe President Obama made the right decision to keep Mr. Bernanke
at the Fed.
In my opinion, he should be reconfirmed without delay, because his
term expires in 3 days. Failure to do so would send the wrong message
to both the American people and global financial markets, at a time of
continued economic uncertainty. It could roll back some significant
progress in restoring market confidence. For instance, under Chairman
Bernanke's leadership, the Dow Industrial Average rebounded
significantly from a 12-year low of 6,547 on March 9, 2009 and reached
a high on January 19th when it closed at 10,725. This represents a gain
of 4,178 points or nearly 64 percent over the course of 10 months. The
S&P 500 has risen about 70 percent since the low in March and also
reached its recent high on January 19, closing at 1,150.23. Retirement
accounts were valued at $8.6 trillion in the third quarter of 2007. But
following the market's bottoming out in March of 2009, retirement
accounts had lost $2.8 trillion--33 percent--of their peak value,
according to
[[Page S310]]
Retirement Savings statistics from the Urban Institute in a January
2010 report. Since then, retirement account balances have rebounded
sharply. Accounts have gained roughly $1.3 trillion--23 percent--ending
the third quarter at around $7.1 trillion. Although assets remain 17
percent below their peak, they are still above their 2005 value and
near their 2006 value.
So we have clearly made some progress and there are positive signs,
but we still have a long way to go. Simply put, the gains on Wall
Street have not been felt by Main Street: The national unemployment
rate is 10 percent, with 15 million Americans out of work; Small
businesses are struggling, and many are going under. In my State, small
business bankruptcies increased by 81 percent last year alone, and
commercial corridors once teeming with business are now plagued by
vacancies; consumer demand remains low as American workers struggle in
these tough times; and, retirement accounts are still down roughly $1.5
trillion from their peak.
These are terrible statistics, and there is much more work to be done
to increase our national prosperity.
But last week, uncertainty caused by news that Mr. Bernanke's
reconfirmation was threatened in the Senate caused the Dow Jones to
fall by 552 points, with a 216-point drop on Friday alone.
The point is clear: the situation is very volatile. President Obama
has clearly indicated that he believes Mr. Bernanke is the man for the
job, and I also believe this is the case.
Let me tell you why.
First, Mr. Bernanke is an expert on the Great Depression, a scholar
who understands the causes of, and remedies for, dramatic economic
downturns like the one we experienced last year. There is no one better
qualified to be at the helm of the Fed at this time, and he is
dedicated to fulfilling its mission to restore prosperity, create jobs
and keep prices stable.
Second, Mr. Bernanke played a key role in averting a much greater
financial crisis.
He took critical steps to stop the economic freefall and restore
stability. He aggressively cut interest rates early on, reducing the
target Federal funds rate to nearly zero. It has remained at this level
since December 2008.
Under his leadership, the Fed played a central role in quelling last
year's financial turmoil. It launched joint efforts with other agencies
and foreign authorities to avert a collapse of the global banking
system. It ensured financial institutions adequate access to short-term
funding when private funding resources dried up.
It led the ``stress tests'' on large U.S. banks to ensure that these
institutions had adequate capital and consumers would be confident that
their bank deposits were safe.
The Fed, under Mr. Bernanke's leadership, also created targeted
lending programs that helped ease the flow of credit to many
businesses.
For example, the Term Asset-Backed Securities Loan Facility has
financed more than 3.4 million home loans, more than 100 million credit
card accounts, 480,000 loans to small businesses and 100,000 loans to
large businesses.
We are starting to see the positive results of these bold moves.
There are undoubtedly legitimate critiques of Mr. Bernanke. I agree
that more transparency is needed at the Federal Reserve. And, I would
have liked to see more action taken to curb the abusive lending
practices which have led to literally millions of foreclosures in my
home State of California.
Many gaps in regulation and oversight of our financial system still
remain.
The administration just proposed the Volcker rules which I believe
would succeed in ending the rampant speculation and excessive size of
``too big to fail'' institutions that led us to where we are today.
Congress must act swiftly to regulate the financial sector more
prudently, and expand authority for the Fed, the Commodity Futures
Trading Commission, and the Securities and Exchange Commission.
We must intelligently close these gaps in regulation, not risk an
economic backslide by taking out our collective frustrations on Mr.
Bernanke.
Everyone is flawed, and there is more than enough blame to go around.
But we must also give credit where it is due, and Mr. Bernanke
successfully helped to pull this nation back from the brink.
His academic expertise on the Great Depression, coupled with his
experience in facing down the greatest economic turbulence since the
1930s, makes him an unparalleled choice for leadership at the Fed right
now.
USA Today, in an editorial published yesterday, gave a forceful
defense of Mr. Bernanke's reconfirmation. I want to quote from it here,
because I think it gives a very clear assessment of the situation:
The question facing the nation is, who do you want in
charge of this delicate task? Someone who has intimate
knowledge of what needs to be done, has learned from past
mistakes and has the confidence of the financial markets? Or
someone new who, in order to win congressional confirmation,
will be hamstrung by promises not to take difficult-but-
necessary steps, such as bumping up interest rates to keep
inflation in check?
Bernanke deserves considerable credit for helping stave off
economic collapse. For that reason, he also deserves another
term as chairman.
Mr. President, I couldn't agree more.
Mr. Bernanke deserves a chance to finish the enormous and historic
task at hand. He has done well thus far, and I intend to support him
for a second term as Chairman of the Fed.
Ms. MIKULSKI. Mr. President, people are angry and they are anxious.
They are worried their middle class way of life is slipping by. They
are worried about their jobs. They are worried about their pensions.
They are worried about the cost of everything from health care to
housing to higher education. They have to make tough decisions. They
are sitting at their kitchen tables balancing their checkbooks and
being careful about spending. They want to know we are being careful
too. They want an administration and a Congress that do two things:
create jobs and spend money frugally and wisely.
I am angry too. I was told that TARP was needed to get money to Main
Street. I didn't care if every firm on Wall Street went bankrupt. But I
did care about jobs, small businesses, and families' mortgages. That's
what I was told TARP was about. Instead--ungrateful bankers got an
astonishing amount of money from taxpayers who used it to pay
themselves bonuses.
Chairman Bernanke made four big mistakes: he let banks take on too
many risks, he ignored the housing bubble, he failed to protect
homeowners, and he gave too much taxpayer money away for too little in
return. It is not just Mr. Bernanke though. The entire economic policy
team for the last two administrations deserves blame
So I had questions about this nomination. I spoke with Maryland
business leaders, looked into Mr. Bernanke's record, and I met with him
at the end of last year.
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.
I know that people's top priority is jobs. Mr. Bernanke needs to
realize that too. When 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
just been tame and tepid. We need the same urgency from Mr. Bernanke to
jump-start the job market as he gave to Wall Street to jump-start the
financial markets.
The Fed has pumped trillions of dollars into the financial system.
Congress has approved billions more. Money went to the banks and
because we thought they'd lend it out to help small businesses and help
community banks, and community pillars. But what I have heard since
then is that companies' credit is being withdrawn and responsible
applicants are being rejected for reasonable loans. We need to try
something different to make sure money goes where we want it to--and
doesn't get used by banks to pay bonuses.
I am also angry that economic policy-makers went all out to help Wall
Street and only halfway to help homeowners. In his second term Mr.
Bernanke needs to do much more to
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help them, and help communities ravaged by too many foreclosures.
Mr. Bernanke needs to realize that ``Crisis Averted'' doesn't mean
``Mission Accomplished.'' There have been too many missed signals--
misplaced priorities. But I am voting to confirm Mr. Bernanke because
he is not a man of ideology and when we needed him most his expertise
and level head probably helped stop a catastrophe. He didn't panic, and
learned from history, which he has studied closer than anyone else. No
one understands the risks the economy faces better than he does. That
does not mean we shouldn't rock the boat. We need bold new approaches--
and I'll fight for them.
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. And that in his second
term he will focus better on jobs, getting lending going to the middle
economy, and mortgages. So I will vote to confirm him for a second
term.
The PRESIDING OFFICER. Who yields time?
Mr. DODD. Mr. President, I believe there are some Members who are
coming. Absent someone walking in the door, I suggest the absence of a
quorum and ask unanimous consent that the time be equally allocated to
both sides.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mrs. BOXER. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mrs. BOXER. Mr. President, I ask unanimous consent that I be yielded
5 minutes of time off the Democrats' time.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mrs. BOXER. Mr. President, I rise today to explain why I will not
support the nomination of Ben Bernanke for another term as Chairman of
the Federal Reserve. But I also want to make it clear that I do not
support a filibuster, because I believe he deserves to have a vote on
his nomination.
I have not met anyone who doubts that Chairman Bernanke is very
bright, he is very dedicated, he is very conscientious, he is an expert
on the depression era. I am grateful for the work he did in those
critical weeks when the American system teetered on the verge of
collapse; that is, our economic system.
But I do think this is a moment to take stock, in many ways as
President Obama did in his State of the Union Address: How did we get
to this very difficult economic place? I think as we look at that,
people have to be held accountable for their actions along the way.
That means Chairman Bernanke must be held accountable for his record.
I asked my staff, could you get me the Charter of the Federal
Reserve, because I know it has many objectives that it needs to
fulfill. Here are the four main objectives to the Federal Reserve:
One, conducting the Nation's monetary policy in pursuit of maximum
employment and stable prices.
Two, regulating the banking system to ensure the safety of the
Nation's financial system, and protecting the credit rights of
consumers.
Three, maintaining the stability of the financial system and
containing systemic risk that might arise in the financial markets.
Those are three out of the four responsibilities we have to take a
closer look at. I look at those three responsibilities, and, frankly, I
don't see how the Fed met those responsibilities--remember, maximum
employment, safety of the Nation's financial system, protecting the
credit rights of consumers, maintaining the stability of the financial
system, and containing systemic risk that may arise in financial
markets.
Put on top of that the fact that in the 1990s, Congress gave the Fed
the very important responsibility of overseeing the housing market to
stop predatory lending. That was an added specific responsibility. I
have to say that I think Chairman Bernanke vastly underestimated the
dangers of the housing bubble and unconstrained subprime lending.
This is what he said in May of 2007:
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 . . . The vast majority of
mortgages, including subprime mortgages, continue to perform
well.
That was Mr. Bernanke in May 2007. That is hard for me to look at and
say that we should vote to confirm him. He failed to spot the dangerous
banking practices, in addition to the mortgage practices that led to
the crisis.
In February 2008, 7 months before the greatest financial collapse in
80 years, he said:
Among the largest banks, the capital ratios remain good,
and I do not anticipate serious problems . . . among the
large internationally active banks.
So until the crisis occurred, Chairman Bernanke was a major advocate
for even more permissive banking regulation.
Now we see unemployment at 10 percent nationally and in my State a
horrific 12-plus percent.
The American people have the right to ask whether the Fed is truly
committed to supporting Main Street's economy, not just Wall Street.
That is why I cannot support his reappointment. He sat by when
President Bush put all the policies into place that led us to this
crisis. He was George Bush's choice. He sat there and said everything
was fine, everything was wonderful, everything was good, housing was
OK.
If Mr. Bernanke is confirmed--and I expect he will be--I hope he will
listen to what a lot of us are saying and turn his full attention to
Main Street, to the people who need his support. People out there need
the wind at their backs. They need somebody who understands what they
are facing in terms of their housing problems, their unemployment
problems. Let's get this economy back on track.
I yield the floor.
The PRESIDING OFFICER. The Senator from South Carolina is recognized.
Mr. DeMINT. Mr. President, it is not often that I agree with the
Senator from California, but I certainly appreciate her perspective on
this issue. A number of us from a broad spectrum in both parties are
concerned about this nomination.
I rise to oppose the nomination of Ben Bernanke as Federal Reserve
chairman. It is important that we look at this not just as a single
nomination but as part of a much bigger picture we need to recognize.
The confirmation of Ben Bernanke is a confirmation of policies that
brought our economy down. If we ignore that, we are going to continue
these same policies and condemn ourselves, our country, and our fellow
Americans to high unemployment and much less prosperity in the future.
It is never fair to blame any one person for major problems such as
we have in this country. But it is important, when we have this kind of
problem, where millions of Americans have lost in total trillions of
dollars and jobs have been lost and families have suffered greatly,
that we recognize the difference between the problems we are looking at
today and the real causes of those problems, what we call in business
``the root cause'' of problems. We learn, when we do strategic
planning--and I did this for years for companies--that if you go in and
look at the problems and try to solve them and never go back and
understand the root causes, all you are doing is fixing symptoms which
never get fixed because you did not understand the cause of the
problems.
Today, we do have a difficult economic situation with high
unemployment. We have debt at levels that everyone agrees is
unsustainable. Countries all over the world are beginning to question
whether we can repay our debts. Some are beginning to question whether
they should lend us more money to fund our reckless spending.
Despite what we heard last night about a freeze on spending, everyone
laughed when we said that starts next year. Today, we voted to raise
the debt limit another $1.9 trillion. We are going to take that debt to
over $14 trillion. There is no foreseeable way we can pay that back.
This is at a time when a large group of Americans called the baby
boomers are going to retire and
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the cost of Social Security and Medicare is going to skyrocket. These
are promises we have to keep to seniors because they paid for it, but
we have no idea how we will keep those promises right now, particularly
in light of the current economic situation.
As we look at where we are, we need to recognize how we got here. As
I have talked to banks, businesses, foreign financial ministers from
Europe who have come here, everyone agrees there are two major causes
of the economic problems here and around the world. One is the high
leverage or the high borrowing that went on because of the loose
monetary policy at the Federal Reserve. Easy money, cheap money
encouraged companies and individuals to borrow more than they could
afford to pay back because it was easy to get and cheap. The big banks
on Wall Street could more easily borrow money than raise capital. Those
were incentives created by the policies at the Federal Reserve.
The second problem is what we are calling toxic assets, which are
securitized subprime mortgages, were facilitated by Fannie Mae and
Freddie Mac, two government-sponsored enterprises that reflected the
political policy of this Congress. It is our responsibility to oversee
Fannie Mae and Freddie Mac and to make sure they are doing what is
appropriate for our economy. But what happened is the criteria for
lending went away. Local mortgage companies could make almost any loan
they wanted to, to anyone whether they could afford to pay it back,
using easy money from the Federal Reserve and low criteria for
forgiving those loans. They sold them all to Fannie Mae. If Fannie Mae
had not been there to buy these loans, these irresponsible loans would
not have been made in the first place. But to make matters worse,
Fannie Mae and Freddie Mac bundled these subprime mortgages up into
packages we call securities and sold them, sold them to banks as
assets, sold them all over the world. These are the toxic assets that
brought down the financial institutions once the housing bubble burst.
For the President, for Ben Bernanke, for Secretary Geithner to come
in and indict the free market system and the greed of corporations and
banks misses the whole point of what caused this problem. Certainly,
these two causes created perverse incentives for the markets, the banks
to practice irresponsible behavior. There is no question that went on.
But to say that was the cause of where we are today misses the point.
My problem with Ben Bernanke, the President, and Secretary Geithner
is not that they made mistakes, because Congress certainly made
mistakes in not overseeing Fannie Mae and Freddie Mac and asking the
right questions of the Federal Reserve, but the fact that despite the
evidence being so clear of what really caused the problem, Mr. Bernanke
still does not recognize those as the causes. In fact, he continues the
same easy-money policy. He expresses no sense of urgency that we need
to get the Federal Government out of owning AIG, Fannie Mae, General
Motors, or Chrysler. When we bring him in for hearings, he seems to be
more of a command-and-control person than someone who believes in a
free market system that we need to have good laws and regulations to
guide. But he and Secretary Geithner and the President indicate that
they can run this economy, that they can micromanage it.
To confirm Ben Bernanke is to confirm the continuation of easy-money
policies, high leverage, as well as the continuation of what Fannie Mae
and Freddie Mac did to create these toxic assets. We are not asking the
right questions. I contend that we cannot solve today's problems with
the same people who created them.
President Obama last night liked to blame George Bush for the
problems. Yet he is nominating his people. Secretary Geithner was
involved with the Federal Reserve and was the architect of these
bailouts. Ben Bernanke has been here for 4 years and was a key part of
the bailout, the easy-money policy, and has yet to say that was a
problem.
This is more than just another nomination. Everything we work for in
a material sense rests on the value of our dollar and the monetary
system. The American economy, the worldwide economy rests on what the
Federal Reserve does. This is the Federal Reserve that told us subprime
mortgages would not cause an economic breakdown. Ben Bernanke told us
Fannie Mae was well capitalized a few months before its collapse. We
have to depend on the leadership at the Federal Reserve to tell us the
truth. If our monetary system crashes because of bad policy, everything
America has worked for, all our material wealth will be gone. This
country will see a crisis the likes of which it has never seen.
This body is not taking this nomination seriously enough. We are
moving ahead quickly, when what we need to do is have a full audit of
the Federal Reserve, to look at what has been going on, look at their
involvement with the current crisis, and to make sure they are on the
right path.
The Constitution gives the Congress the responsibility to protect our
monetary system. Years ago, we delegated that to the Federal Reserve,
but that does not relieve us of our responsibility. To confirm Ben
Bernanke without even knowing what is going on at the Fed, without
hearing them say what really caused the problem we have today, is to
condemn us to the same path that brought us to where we are.
Voting to confirm Ben Bernanke is a bad decision today. I ask all
colleagues to reconsider. This is probably the biggest mistake we will
make in a long time, to continue the same policy we started at the
Federal Reserve, our monetary system, as well as what we have done here
in Congress.
I again encourage my colleagues to reconsider their commitment to
confirm Ben Bernanke.
The PRESIDING OFFICER. The Senator from Connecticut.
Mr. DODD. How much time remains?
The PRESIDING OFFICER. The Senator has 8 minutes 13 seconds.
Mr. DODD. I yield 5 minutes to my friend and colleague from Vermont.
He has been very strong on this issue, and I want to give him as much
time as I can.
Mr. SANDERS. Mr. President, this is, in fact, an enormously important
issue. The reality is that all over our country, hard-working, decent
people have lost their jobs. They have lost homes, their savings. They
have lost their ability to go to college. We are experiencing the
highest level of unemployment since the Great Depression. All of this
did not happen by accident. It happened because of the greed, the
recklessness, and the illegal behavior of Wall Street, of CEOs there
who converted our financial institutions into the largest gambling
casino in the history of the world.
One of the major functions of the Fed is to protect the safety and
soundness of our financial institutions. There can be no debate, Mr.
Bernanke, as Chairman of the Fed, failed at that important job, and
this country and the world almost saw a major financial collapse, and
we have seen in this country a horrendous recession.
I think average American citizens have a hard time understanding how
we reward failure, how we say to somebody who was asleep at the switch
in terms of regulating our financial institutions: Congratulations. You
failed. There is a major recession. You are getting reappointed. I do
not think people understand why and how that should happen.
Second of all, when we talk about the bailout, it is not just the
$700 billion that went to TARP. There were trillions of dollars in
zero-interest loans, or almost zero-interest loans, that went to major
financial institutions. It is incomprehensible to me the Chairman of
the Fed can lend out trillions of dollars, and when I asked him: Who
got the money? He said: Sorry, the American people don't have a right
to know that--in so many words. I am not telling you.
How can you have confidence in the leadership of the Fed when there
is virtually no transparency--trillions of dollars being lent out, and
we do not know who received it? That is not acceptable to me. We need a
Fed Chairman who believes in transparency, who is going to tell the
American people who has received those loans.
We are also today, importantly, not just talking about the past. We
are talking about the future. We are talking about how we pull this
country out of a recession in which 17 percent of our people are
unemployed or underemployed. The fact is, the Fed today
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has the capability, the power to take significant action to protect the
middle class and working families of this country. I say to the
Presiding Officer, I do not know about Illinois, but I will tell you,
in Vermont I get calls every week.
People are saying: Why did you help bail out these large banks, and
now they are charging me 25, 30 percent interest rates on my credit
card?
Mr. Bernanke and the Fed have the power today to lower interest rates
on credit cards. I want a Fed Chairman who is going to do that. Last
night we heard from President Obama, who appropriately pointed out very
serious problems that small businesses all over this country are having
in terms of getting the low-interest loans they need in order to create
the kind of jobs our economy desperately requires. The Chairman of the
Fed today has the power to provide low-interest loans to small- and
medium-sized businesses.
It is not just large financial institutions that can receive zero-
interest or low-interest loans. I know it is a great shock to the Fed,
but small- and medium-sized businesses--in a productive economy that
creates real jobs--can also receive those loans. I want a Fed Chairman
who will provide those loans.
It is hard to believe the largest financial institutions in this
country that we bailed out because they were too big to fail--do you
know what. Three out of four of them are even bigger today. It is time
to break up those financial institutions that are too big to fail. If
they are too big to fail, they are too big to exist.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. SANDERS. Mr. President, we need a new direction on Wall Street.
We need a new Fed Chairman.
Thank you very much.
The PRESIDING OFFICER. The Senator from Alabama is recognized.
Mr. SESSIONS. Mr. President, I, too, would like to share my concerns
in opposition to Mr. Bernanke's reappointment, and I think my
colleague, Senator DeMint, summed it up pretty well.
One of the debates has been, did the Central Bank, which is not a
free market activity, fail--or did as people say the market fail. I
agree with him. I do not believe it is exactly correct to say that. The
Fed dabbles in the market in an attempt to manipulate the market. One
of the debates has been that Mr. Bernanke allowed the interest rates in
2002 through 2005 to remain too low, which caused the bubble and which
caused the burst and put us in this fix.
The complaint has been that he violated the Taylor rule, which is the
rule that would advise how interest rates should be set by the Central
Bank. He made a speech in early January of this year that I think was
defensive and went to some length to say he did not violate the Taylor
rule and that low-interest rates did not cause the bubble. So it is one
thing to make a mistake; it is another thing to make a mistake and
refuse to acknowledge the mistake.
I will just say as background, the Wall Street Journal said the
minutes of the Fed Board meetings prior to his becoming Chairman, when
he was merely a member of the Board, indicate he was the advocate for
lower interest rates and actually warned of deflation during this
period which was wrong.
Mr. Taylor responded in the Wall Street Journal. I will just quote
what he said:
This rule--[the Taylor Rule] calls for central banks to
increase interest rates by a certain amount when price
inflation rises and to decrease interest rates by a certain
amount when the economy goes into a recession. My critique,
which I presented at the annual Jackson Hole conference for
central bankers in the summer of 2007 is based on the simple
observation that the Fed's target for the federal-funds
interest rate was well below what the Taylor rule would call
for in 2002-2005.
Mr. Taylor is the author of it. He warned of it in the summer of
2007. Mr. Bernanke is insisting, just a few weeks before this, that he
did not violate the rule. A little later, Mr. Taylor goes on to say:
In his speech [on January 3], Mr. Bernanke's main response
to this critique was to propose alternatives to the standard
Taylor rule--and then to use the alternatives to
rationalize--
I would say to justify--
the Fed's policy in 2002-2005.
Mr. Taylor goes on to say:
In one alternative, which addresses what he describes as
his ``most significant concern regarding the use of the
standard Taylor rule,'' he puts the Fed's forecasts of future
inflation into the Taylor rule rather than actual measured
inflation. Because the Fed's inflation forecasts were lower
than current inflation during this period, this alternative
obviously gives a lower target interest rate and seems to
justify the Fed's decisions at the time.
So Mr. Bernanke is saying they took his rule and they altered it.
They did not use as the factor actual interest rates but what they
predicted interest rates to be, and, of course, their prediction was
wrong.
Mr. Taylor goes on to say:
There are other questionable points. Mr. Bernanke's speech
raises doubts about the Taylor rule by showing that another
version of the rule would have called for very high interest
rates in the first few months of 2008 [after the bubble
burst]. But using the standard Taylor rule, with the GDP
price index as the measure of inflation, interest rates would
not be so high--
As Mr. Bernanke was suggesting--
as I testified at the House Financial Services Committee in
February 2008.
That is Mr. Taylor's view.
Mr. Taylor goes on to say:
Mr. Bernanke also said that international evidence does not
show a statistically significant relationship between policy
deviations from the Taylor rule and housing booms.
Mr. Bernanke is defending himself still. He said international
studies do not show that our deviation from the Taylor rule had
anything to do with this mess. But Mr. Taylor responds this way:
But his speech does not mention that research at the
Organization for Economic Cooperation and Development in
March 2008 did find a statistically significant relationship.
Mr. Taylor goes on to say:
Mr. Bernanke claimed that ``Economists who have
investigated the issue have generally found that, based on
historical relationships, only a small portion of the
increase in house prices earlier this decade can be
attributed to the stance of . . . monetary policy.''
He is talking about the Fed policy, that they did not have anything
to do with the increase in housing prices. Mr. Taylor calls Mr.
Bernanke's hand. Mr. Bernanke was not right in that statement. Mr.
Taylor says this:
But two of the economists he cites--Frank Smets, director
of research at the European Central Bank, and his colleague
Marek Jarocinski reported in the July/August issue of the St.
Louis Fed Review--
That is the Federal Reserve publication in St. Louis--
They found--
evidence that monetary policy has significant effects on
housing investment and house prices and that easy monetary
policy designed to stave off perceived risks of deflation in
2002-2004 has contributed to the boom in the housing market
in 2004 and 2005.
Mr. Bernanke is saying economists around the world do not agree, and
that is not accurate. As a matter of fact, they found just the
opposite. So remember, the Wall Street Journal said he was the easy
money advocate at the Fed. Mr. Greenspan may have been Chairman, but
during the early part of the decade, Mr. Bernanke was advocating these
low interest rate policies; and they were wrong, and they did lead to a
boom--at least it was a significant factor in the boom, and Mr.
Bernanke is not acknowledging that. I do not appreciate it.
I also am very disappointed he supported President Obama's form of a
stimulus package, saying:
The incoming administration and the Congress are currently
discussing a substantial fiscal package that, if enacted,
could provide a significant boost to economic activity.
However, according to a CNN poll released just yesterday, 74 percent
of Americans believe at least half of the stimulus package was wasted,
and 63 percent believe the projects in the plan were included for
purely political reasons and will have no economic benefit.
I will just say that this stimulus package--$800 billion, every penny
of it going to our deficit and increasing our debt--could only be
justified if it was the most carefully crafted package that created
jobs, but it was not. I knew it at the time, and so did many others,
that this was not a jobs-creating package. It was a political package
put together by the President. It rewarded a lot of his supporters, but
it was not the kind of jobs package we desperately needed. But Mr.
Bernanke supported it, and now we have $800 billion added to our debt
and very little job creation.
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So, Mr. President, I will yield the floor and just conclude by saying
that I do not think this should be rewarded. I know a lot of people are
worried that somebody else might be worse. But I have not seen from him
the kind of gravitas, the kind of stability of leadership, the kind of
consistent message to the American people about the severe plight we
are in and about his plan to get us out of it.
Isn't that what he should be doing? Shouldn't we know what he,
hopefully working with the President, would do to get us out of this
mess? I have not seen it and, therefore, I do not believe we have any
burden of maintaining him. In fact, I think this supports the argument
that he should not be maintained.
Mr. President, I thank the Chair and yield the floor.
The PRESIDING OFFICER (Mr. Merkley). The Senator from Kansas is
recognized.
Mr. BROWNBACK. Mr. President, thank you very much.
I think this is a healthy discussion we are having. We do not usually
discuss much the Fed Chairman or the appointment or the nomination of a
Fed Chairman. Yet monetary policy affects all of us in a huge way and
dramatically affects the world. This is, to me, the sort of debate we
ought to be having, and I am glad we have some differences of opinion.
For a long period of time it seemed as if everybody just treated
monetary policy as something that is in the theoretical world of
economists and mathematicians and central bankers, and they are the
only ones who understand the language; they are the only ones affected
by it; therefore, they are the only ones who ought to discuss it. I am
not at all suggesting that Congress or the legislative branch ought to
be setting monetary policy; we shouldn't. But we ought to be discussing
the people and the principles that are involved and the people we
appoint to these government positions and this government position,
which is so critical and so important to all of us in this country and
around the world.
So I am delighted we are having a discussion about the Fed Chairman,
the appointment of the Fed Chairman in this particular case. I think
Ben Bernanke is a bright gentleman. I have met with him. I have been
the ranking member on the Joint Economic Committee. I have had him in
to testify. I find him quite interesting, bright, and a gentleman.
However, I believe now it is time for us to break this sort of
Washington-New York corridor that establishes monetary policy and bring
somebody in from outside that system to start at the Fed and in the Fed
chairmanship and start looking more toward what Main Street needs in a
monetary policy rather than what Wall Street needs in a monetary
policy. I am not opposed to Wall Street, but they have dominated this
position, people from this Washington-New York corridor, for too long a
period of time. It too dramatically affects all the rest of us, to
simply shut out the rest of the philosophy and thought from across the
country. We need to get to Main Street.
I also have another concern that is taking place beyond the issue of
us breaking out of this New York-Washington corridor for the Fed
Chairman and monetary policy. The second concern I have is I think we
are headed for a huge government bubble. We have seen the dot-com
bubble come, burst, and go. We have just gone through--and we are still
going through--a housing bubble bigger than the dot-com bubble get big
and blow up. Lots of fiscal and monetary policy to blame in both
situations. I think we can look back on the housing one and see both
actions here or lack of actions toward Fannie Mae and Freddie Mac to
pump up this housing bubble. I think we can see the monetary policy
pumping up this housing bubble that burst with huge impact; a number of
people say a near depression type of impact. Now we are heading
possibly toward the biggest bubble of all, a huge government bubble,
blown up by the Fed; huge amounts of money being put out in the system
now to try to prop up, to try to carry us on through this situation. If
not handled correctly, it could burst in a more profound and difficult
way than the housing bubble. To me, it is just one of those
difficulties that is staring us right in the face. Now is the chance
for us to talk about a different direction, and I think we should do
that.
Yesterday, they had a vote of the FOMC, the money supply committee,
and there was one dissenting vote. That dissenting vote was from Tom
Hoenig, who is the chairman of the Kansas City Fed. He believes--and he
is hawkish on the money supply--that we have to start pulling the money
supply back and out of the system before the inflationary bubble takes
off. When you put this much money into the system, you are bound to get
an inflationary bubble and you have to start pulling it back before you
start feeling it. This is the time we have to start addressing those
issues.
I think we ought to look at somebody such as a Tom Hoenig, hawkish on
the monetary supply, to get us into a stable, long-term position and
get us ahead of a government bubble bursting on us; also, somebody from
outside the system, somebody who is more focused on Main Street than
Wall Street, on monetary policy and monetary supply. Now is the time to
do it. This is a good chance to debate this. I don't suppose that is
going to happen here. We are probably going to go ahead with Mr.
Bernanke, who is a fine man, but now is the time to break out of this
before this bubble gets bigger, bursts on us, and causes more of a
problem than what we have even seen with the prior two bubbles. Let's
get outside of that, and let's deal with that before it is on us.
I thank my colleagues and I yield the floor.
The PRESIDING OFFICER. The Senator from Alabama.
Mr. SHELBY. Mr. President, I know we are getting close to the end of
the debate, and we will soon be voting on cloture. I wish to take a few
moments to read a few excerpts from editorials that ran in, of all
publications, the Wall Street Journal, dealing with Chairman Bernanke,
his tenure in office, his misdeeds, and so forth. I also ask unanimous
consent at this time that the full text of the editorials, dated
January 25, 2010, December 3, 2009, and June 23, 2009, be printed in
the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From the Wall Street Journal--June 23, 2009]
Bernanke at the Creation
What the Fed Chairman said at the onset of the credit
bubble, and the lesson for today.
The Federal Reserve's Open Market Committee meets today,
amid a debate over how and when to remove the flood of
liquidity it has poured into the economy in the last 18
months. Fed officials say not to worry, they're as vigilant
about inflation as ever--which is itself a reason to worry.
We've all seen this movie before, when the Fed's failure to
act in time gave birth to the housing bubble and credit mania
that eventually led to panic and today's recession. Will it
make the same mistake now?
We remember that 2003 debate because it turns out we played
a part in it. The Fed recently released the transcripts of
its 2003 FOMC meetings, and what a surprise to find a Journal
editorial the subject of an insider rebuttal from none other
than Ben Bernanke, then a Fed Governor and now Chairman. We
had run an editorial on monetary policy on the same day as
the Dec. 9, 2003 FOMC meeting, and Mr. Bernanke clearly
didn't take well to our warning about ``Speed Demons at the
Fed.''
We reprint nearby both Mr. Bernanke's comments and our
editorial from that day. Readers can judge who got the better
of the argument, but far more important is what Mr.
Bernanke's reasoning tells us about the Fed today. Our guess
is that it won't reassure holders of dollar assets.
* * *
Recall that by the end of 2003 the economy was well into
recovery. Third quarter GDP growth had clocked in at 8.2%
(later restated to 7.5%), and growth in all of 2004 would be
3.6%. The Bush tax cuts had passed in late May, providing a
fiscal boost, and a month later the Fed had cut its fed funds
rate to 1% and would hold it there for a year. Yet by
December Mr. Bernanke was still giving speeches fretting
about ``deflation,'' even as commodity prices were rising and
growth was kicking into higher gear. Thus our Dec. 9 warning,
the first of many by us and others.
Mr. Bernanke's FOMC remarks that day are especially
revealing about how he thinks about monetary policy. In
particular, he dismisses any link between commodity price
increases and future inflation. He cites a study by a Fed
economist claiming to find little connection between
``materials'' prices and overall inflation. Yet the price of
oil was already rising sharply at the time, and it would keep
rising as the Fed maintained negative real interest rates for
many more months. This was a bad mistake.
[[Page S315]]
Rising gas and food prices didn't show up in the Fed's
``core'' inflation measurements, but they sure did wallop
U.S. consumers this decade. It's one reason Americans never
felt great about the expansion. The soaring price of oil also
contributed to the housing bubble by transferring wealth from
U.S. consumers to oil exporters such as the Gulf States and
Russia, which in turn recycled those petrodollars into U.S.
Treasuries and mortgage-backed securities. By ignoring
commodity prices, the Fed fueled the housing boom.
It's also striking how dismissive Mr. Bernanke is of the
declining dollar. We'd have thought the greenback's value
would be the Fed's paramount concern, given its mandate to
keep prices stable. Yet Mr. Bernanke declared that ``large
movements of the dollar against major currencies tend to
translate into smaller movements against the U.S. trade-
weighted basket of currencies and into still smaller effects
on import prices because of imperfect pass-throughs.''
Translation: Exchange-rate fluctuations aren't the Fed's
problem, no matter how disruptive their effect on trade and
capital flows.
Instead of following these actual prices, Mr. Bernanke's
main monetary policy guide is something called ``the output
gap.'' This is the difference between actual GDP growth and
the level of ``potential output,'' or how fast the economy
can grow when it's at full capacity. The problem with this
guide is that it relies heavily on labor costs and the
jobless rate. And because job creation tends to lag economic
recovery, these signals tend to flash yellow long after price
pressures or asset bubbles have begun to build.
All of this is relevant today because there is no evidence
that Mr. Bernanke and his Fed colleagues have changed their
thinking. They still ignore a falling dollar and rising
commodity prices, even as oil has climbed to $70 a barrel
from $40 six months ago. They also continue to be slaves to
the output gap, which means they are unlikely even to begin
to tighten as long as the jobless rate remains high. With
that rate now at 9.4% and likely to rise, the monetary
spigots will probably remain wide open for a long time to
come.
We think the Fed made the right call last fall when it
eased dramatically in the heat of the panic. The financial
shock had caused a decline in the velocity of money, and the
Fed needed to boost the supply of money to prevent a genuine
deflation. The recession this time is far deeper than in
2001-2002, so there is also a case to be made for erring on
the side of being slower to tighten.
But this time the Fed has also gone to greater easing
lengths than it ever has, taking short-rates nearly to zero
and making direct purchases of mortgage securities and even
Treasuries. These are extraordinary acts that push the Fed
deeply into fiscal policy, credit allocation and directly
monetizing Treasury debt. Combined with the 2003-2005
mistake, they have also raised grave doubts about the Fed's
credibility and independence.
* * *
Mr. Bernanke will need political courage that we haven't
seen since Paul Volcker was Chairman in order to exit from
all of these efforts in time to prevent another bubble or
broader inflation. It also wouldn't hurt if the Fed chief
looks back with some humility on his intellectual certainty,
circa 2003, and analyzes why he was so wrong.
____
[From the Wall Street Journal--Dec. 3, 2009]
The Bernanke Record
Federal Reserve Chairman Ben Bernanke faces his Senate
renomination hearing today, amid signs that the confirmation
skids are greased. We nonetheless think someone should say
that, as a matter of accountability for the financial crisis
and looking at the hard monetary choices to come, the country
needs a new Fed chief.
We say this not because of Mr. Bernanke's performance
during the financial panic of 2008, for which he has been
widely and often deservedly praised. Like others in the
regulatory cockpit at the time, he had to make difficult
choices with imperfect information and when the markets were
shooting with real bullets.
He supplied ample liquidity when it was most needed last
autumn, and he has certainly been willing to pull out every
last page of the central banker playbook. If some of those
decisions were mistakes, the conditions the Fed faced were
extraordinary. Anyone at the helm would have made calls that
in hindsight he'd regret.
The real problem is Mr. Bernanke's record before the panic,
with its troubling implications for a second four years. When
George W. Bush nominated the Princeton economist four years
ago, we offered the backhanded compliment that at least he'd
have to clean up the mess that the Alan Greenspan Fed had
made. That mess turned out to be bigger than even we thought,
but we also didn't know then how complicit Mr. Bernanke was
in Mr. Greenspan's monetary decisions.
Now we do, thanks to the release of the Federal Open Market
Committee transcripts from 2003. They show (see ``Bernanke at
the Creation,'' June 23, 2009) that Mr. Bernanke was the
intellectual architect of the decision to keep monetary
policy exceptionally easy for far too long as the economy
grew rapidly from 2003-2005. He imagined a ``deflation'' that
never occurred, ignored the asset bubbles in commodities and
housing, dismissed concerns about dollar weakness, and in the
process stoked the credit mania that led to the financial
panic.
This, too, might be forgivable if Mr. Bernanke had made any
attempt in recent months to acknowledge the Fed's role in the
mania. Treasury Secretary Tim Geithner, Dallas Fed President
Richard Fisher and others have conceded that monetary policy
was too loose. How central banks can minimize, if not
prevent, asset bubbles without inducing recessions would seem
to be a subject for candid Fed debate.
But Mr. Bernanke and Vice Chairman Don Kohn have formed an
intellectual moat around the Fed, blaming the credit bubble
on the ``global savings glut'' that they themselves helped to
create. They are the Edith Piafs of central banking,
regretting nothing.
All of this bears directly on how the Fed will operate over
the next four years. We are now in another period of
extraordinary monetary ease. Mr. Bernanke is assuring the
world that, this time, he knows how and when to start
removing this stimulus, even as he also promises that the Fed
will remain easy for months to come. The guideposts the Fed
claims to follow on policy--the jobless rate, ``resource
utilization''--also remain the same. Price signals,
especially the value of the dollar, count for much less in
this Fed's decision-making.
Earlier this decade, the Fed had 20 years of sound-money
history as a source of credibility. The world's investors
were willing to give the Greenspan Fed the benefit of the
doubt--too much doubt as it turned out. But now, after the
mania and panic, investors are unlikely to show such
forbearance. That's already clear in Asia, where the falling
dollar is creating monetary distortions, and investors are
bidding up assets and currencies on a bet that the dollar is
in for further declines. Sooner rather than later, Mr.
Bernanke will have to tighten money even if the U.S. jobless
rate remains higher than everyone would like.
The Fed chairman has shown he knows how to ease money, and
creatively so. But that is the easy part of his job. The hard
part, the time when central bankers earn their fame, is when
they have to take the money away. We see little in the
chairman's policy history or guideposts to suggest he will be
willing to endure the criticism that will come with
tightening money amid a lackluster recovery, if that is what
is required to protect the dollar or prevent an inflation
outbreak.
The political irony today is that even as Mr. Bernanke is
cruising toward confirmation, the Fed as an institution is
under its most sustained political attack in two generations.
The political class is especially riled about the Fed's
forays into fiscal policy. While that is understandable given
the last year, the response to this action should not be to
put the Fed under even greater political control from
Congress. That is the Argentinian solution.
The better response is to hold policy makers accountable
for their actions, including chairmen of the Federal Reserve.
At this monetary moment more than any since the late 1970s,
the Fed needs a hard-money chairman with the courage and
credibility to resist the temptation to escape from the
consequences of the last bubble by floating another one.
____
[From Wall Street Journal Editorial, Jan. 25, 2010]
The Bernanke Nomination
The politicians turn on a political central banker.
The White House said yesterday it has damped down a
political revolt against Ben Bernanke and now has the votes
to secure the Federal Reserve Chairman's second four-year
term. Whether or not Mr. Bernanke is confirmed, the lesson we
draw is that overly political central bankers will eventually
be undone by politics.
There's no doubt that some of this reconfirmation panic is
nothing but political opportunism. When we opposed Mr.
Bernanke's reconfirmation on December 3, the facile consensus
was that the Fed chief was a master of the universe who had
saved the world from depression. But after Scott Brown's
victory in Massachusetts last week, Senate Democrats are
suddenly looking for a financial political sacrifice.
President Obama doesn't look ready to throw over Treasury
Secretary Tim Geithner, so Mr. Bernanke is the designated
spear catcher.
The Democrats' loudest complaint, moreover, is that Mr.
Bernanke and the Fed haven't been easy enough in printing
money. Majority Leader Harry Reid declared his support for
Mr. Bernanke on Friday, but not before extracting what he
said were concessions about future Fed policy.
The Fed chief promised, said Mr. Reid, that he would
``redouble his efforts'' to make credit available and that
Mr. Bernanke ``has assured me that he will soon outline plans
for making that happen, and I eagerly await them.''
Redouble? The Fed has already kept interest rates at near
zero for more than a year, and it is buying $1.25 trillion in
mortgage-backed securities to refloat the housing bubble,
among other interventions into fiscal policy and credit
allocation. Is the Fed going to buy another $1.25 trillion,
or promise to keep rates at zero for another 14 months?
Mr. Reid's declaration of a confirmation quid pro quo will
not reassure global investors who already fear that the Fed
lacks the political will to withdraw its historic post-
crisis liquidity binge soon enough to avoid new asset
bubbles.
[[Page S316]]
Our own view is that Mr. Bernanke is already far too
susceptible to political pressure. As a Fed governor, he was
Alan Greenspan's intellectual co-pilot last decade when their
easy money policies created the housing mania. When Congress
later put political pressure on the Fed to direct credit
toward housing, and even to student loans, Mr. Bernanke (who
was then chairman) also quickly obliged.
More ominously for the next four years, Mr. Bernanke
continues to deny any Fed monetary culpability for creating
the mania. Shortly after the New Year, even with his
nomination pending, Mr. Bernanke issued an apologia that was
striking for its willingness to play to the Congressional
theory of the meltdown by blaming bankers and lax regulators.
We won't rehearse our decade-long monetary argument with Mr.
Bernanke today--see ``Bernanke at the Creation,'' June 23,
2009. But the chairman's refusal to acknowledge any mistakes
is one reason the dollar is so weak in global capital
markets. Investors are hedging their bets in commodities and
nondollar assets.
Yes, much of Wall Street wants to see Mr. Bernanke
confirmed. The Street is currently making a bundle off Fed
policy, as it borrows at near-zero rates and lends long, and
the banks don't want that to end. The banks also loved
negative real interest rates in the middle of the last
decade, and we know how that turned out. Wall Street always
loves easy money--until inflation returns, or the bubbles
pop.
Others argue that any alternative to Mr. Bernanke could be
worse, and that is certainly a risk. Mr. Geithner and White
House economic adviser Larry Summers couldn't be confirmed,
even in a Democratic Senate. In the short term if Mr.
Bernanke is defeated, Vice Chairman Donald Kohn might run the
Open Market Committee, and he shares Mr. Bernanke's contempt
for Fed critics. President Obama could also select San
Francisco Fed President Janet Yellen, but she thinks the Fed
should be even easier.
Still, we can think of current or former presidents of
regional Fed banks who have hard money credentials. They
would also not carry the baggage of whatever Harry Reid
extracted as a price of confirmation.
We agree that the Fed needed to ease money precipitously
when the financial markets suffered their heart attack in
late 2008, and we praised Mr. Bernanke for that at the time
and since. But the issue for the next four years is whether
the Fed can extricate itself from its historic interventions
before it creates a new round of boom and bust. We already
see signs that it has waited too long to move.
The Fed as an institution is also under political attack in
a way that it hasn't been since the early 1980s, and that was
when Paul Volcker was being excoriated for being too tight.
That criticism has rarely if ever been leveled at Mr.
Bernanke. The next Fed chairman is going to need the market
credibility, and the political support, to raise interest
rates when much of Congress and Wall Street will be telling
him to stay at zero. That is the real reason to oppose a
second term for Chairman Bernanke.
Mr. SHELBY. Mr. President, the first point the Wall Street Journal
editorial highlights dealing with Chairman Bernanke's overt political
activities states:
Whether or not Mr. Bernanke is confirmed, the lesson we
draw--
This is the Journal editorial staff--
is that overly political Central bankers will eventually be
undone by politics.
They always are.
The Wall Street Journal goes on to conclude:
Our own view is that Mr. Bernanke is already far too
susceptible to political pressure. As a Fed governor, he was
Alan Greenspan's intellectual copilot last decade when their
easy money policies created the housing mania.
On Mr. Bernanke's loose money record, the Journal noted in these
editorials:
Mr. Bernanke was the intellectual architect of the decision
to keep monetary policy exceptionally easy for far too long .
. . He imagined a deflation that never occurred, ignored the
asset bubbles in commodities and housing, dismissed concerns
about dollar weakness and in the process, stoked the credit
mania that led us to where we are today in the financial
panic.
Finally, the Wall Street Journal points out in regard to Chairman
Bernanke:
The Fed Chairman has shown he knows how to ease money . . .
But, that is the easy part of his job. The hard part, the
time when Central bankers earn their fame, is when they have
to take the money away. We see little at this point in the
Chairman's policy history or guideposts to suggest he will be
willing to endure the criticism that will come with
tightening money amid a lackluster recovery, if that is what
is required to protect the dollar or prevent an inflation
outbreak.
For these and other reasons, the Wall Street Journal, one of the most
widely recognized business publications in the world, opposes the
nomination, as I do, of Chairman Bernanke.
I yield the floor.
The PRESIDING OFFICER. The Senator from Connecticut.
Mr. DODD. Mr. President, how much time remains?
The PRESIDING OFFICER. Three minutes remain.
Mr. DODD. Totally?
The PRESIDING OFFICER. The minority party has 8\1/2\ minutes
remaining.
Mr. DODD. I will use the 3 minutes, and I will inquire of my friend
and colleague from Alabama, at what point are we going to conclude this
debate?
Mr. SHELBY. We are checking to see.
Mr. DODD. Let me go ahead. I will assume we will probably wrap up the
debate with 3 minutes remaining.
We have a diversity of opinions, including from Paul Krugman, who is
known as a more progressive economist, in favor of this nomination,
although and albeit he has certain caveats he expressed about the
nominee, Ben Bernanke; the Washington Post; and others as well. Warren
Buffett was asked on CNBC about this nomination and he said: All I can
say is, if you are going to turn him down, let me know a day or two in
advance because I would like to sell off some stock. They asked him
why, and he said because he believed the message to the markets would
be a devastating one.
The one thing about the Federal Reserve--and there are legitimate
complaints about the Federal Reserve System--but what we don't need is
for short-term politics to become the vehicle by which we decide Fed
policy. The independence of the Fed has been a critical component for
stability in our economy. I happen to believe--despite being the chair
of the Banking Committee for all of 2007, as the Presiding Officer
knows, I could not get the attention of the previous administration,
including the Federal Reserve, about the mortgage crisis in our
country. We had 12 hearings, the first of which was on February 7,
2007, on this subject matter alone. So if I were going to decide my
vote on this nominee on that basis, I would vote against Ben Bernanke
because, frankly, it was a failure by the previous administration early
on not to understand the gravity of this situation.
But I can't make my decision solely on that. The fact is, as I said
earlier, we have had a leader in the Federal Reserve over the last year
and a half who virtually saved our economy from a predictable collapse
had he not been there. Beginning in the fall of last year, when a group
of us were in the room of the Speaker of the House, Democrats and
Republicans, the Chairman of the Federal Reserve warned us, if we
failed to act in a number of days, the entire financial system in this
country and a good part of the world would melt down, to give an exact
quote. I don't need to tell my colleagues that was sort of the economic
equivalence of a 9/11 moment, when we were warned by the most important
central banker in the world what could happen if we didn't act.
As a result of Ben Bernanke's leadership, as well as others--people
such as Judd Gregg, Bob Corker, Chuck Schumer, who worked on this, the
leadership in the House--we were able to put together a terribly
unpopular package, but 75 of us on that night in this Chamber voted for
that very difficult proposition, to avoid the kind of catastrophe that
would have happened. There are very few people I think who would have
had the ability, the creativity, the imagination, and the courage to
come up with these ideas. Ben Bernanke did. So as a result, we are in
far better shape today.
However, we are far from out of the woods. We have a foreclosure
problem that is still huge. We have commercial problems that are coming
along that are going to be massive. If we don't have a Chairman of the
Federal Reserve but only an Acting Chairman, I don't know what that
means--and particularly the individuals who helped to create the very
imaginative vehicles that allowed us to come out of this problem. To
have him walk away and find the Federal Reserve, this important central
bank, without leadership at this critical moment, I think would be
beyond shameful. It would be the height of irresponsibility.
As Democrats and Republicans, the previous administration offered
this nomination. Many of us supported it. We need to come together, at
least in moments such as this, not to abandon
[[Page S317]]
our country over partisan politics or ideology and failing to
understand that if there need to be reforms in the Fed, let's reform
them, but let's not walk away from an importantly critical individual
who has made a difference in our economy and our Nation. For that
reason, I urge my colleagues to terminate this filibuster--vote to end
that--and then vote to confirm Ben Bernanke as the Chairman of the
Federal Reserve.
I have been told I can speak until 3:20, but I will not take up all
the time. As I said a moment ago, this is one of those moments where we
need to step back and recognize the danger of our actions. This is not
just a free vote. I know some people would prefer--they have the right
to vote--to vote against the guy but hope he gets confirmed. That may
work, but it is dangerously precarious. If we don't have 60 votes to
end this filibuster, and if we don't produce the votes to confirm him,
then I think this Congress, this body, regretfully, will have to bear
the responsibility of abandoning the very people and situations we talk
about today--jobs, the housing market, getting our economy back on its
feet again--and anticipate the kind of reaction we will see in the
markets and elsewhere, setting us back weeks, if not months or years,
in our ability to get through this fragile period and allowing the
hopes and aspirations and the confidence of the American people to
grow.
I know it is an awful lot to stake the future of all that on just a
nomination, but this is not some Assistant Under Secretary of some
other agency. It is the central bank Chairman of the most central bank
in the world. It is a critically important component in us continuing
our path of economic recovery. We will bear the collective
responsibility of failing to meet that obligation if we walk away from
this obligation by either continuing this filibuster or defeating this
nominee.
So I urge my colleagues, Democrats and Republicans--there is enough
to battle about on how we are going to deal with these issues in the
coming weeks, but on this matter let us send a message to the American
people that we understand their frustrations, their worries, and we are
doing everything we can to get us back on track again. Witness the
President's remarks last evening.
You have a laser-like focus on the economy and job creation in our
country. Don't make that effort fail because we send a message to our
markets and the world that we cannot confirm an individual who saved us
from an economic catastrophe in our country.
I urge my colleagues to pass the cloture motion to end debate and
then, of course, to confirm Ben Bernanke as chairman of the Federal
Reserve.
With that, I yield back the remainder of the time and suggest the
absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. DURBIN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.