Four years ago when you emerged prior to the Senate for verification to be Chairman of the Federal Reserve, I had been the only Senator to vote against you. In fact, I used to be the only Senator to improve serious concerns about you even. I opposed you because I knew you’ll continue the legacy of Alan Greenspan, and I had been right.
But I did so not know how right I would be and may not begin to imagine how wrong you’d be in the next four years. The Greenspan legacy on monetary plan was breaking from the Taylor Rule to provide easy money, and thus inflate bubbles. Not merely did that policy is continued by you when you took control of the Fed, but every Greenspan was supported by you rate decision when you were on the Fed earlier this 10 years.
Sometimes you even wished to go further and provide even simpler money than Chairman Greenspan. As recently as a notice you delivered me fourteen days ago, you still won’t admit Fed activities played any role in inflating the housing bubble despite frustrating evidence and the consensus of economists to the in contrast.
And in your time and efforts to keep filling up the punch dish, you cranked in the printing press to buy mortgage securities, Treasury securities, commercial paper, and other property from Wall Street. Those purchases, by the way, resulted in some nice earnings for the Wall structure Street sellers and banks who sold them for you, and the G.S.E. Federal Reserve Act only allows the purchase of securities backed by the federal government. On consumer protection, the Greenspan policy was don’t do it.
You went along with his policy before you were Chairman and continued it once you were promoted. The most glaring example is it took you 2 yrs to finally control subprime mortgage loans after Chairman Greenspan did nothing for 12 years. Then, Even, you merely acted after pressure from Congress and after it was clear subprime mortgage loans were in the center of the financial meltdown.
On other consumer safety issues you merely acted as the time approached for your re-nomination to be Fed Chairman. Alan Greenspan refused to consider bubbles or try to do anything other than create them. Likewise, it is clear from your claims during the last four years that you failed to spot the housing bubble despite many warnings. Chairman Greenspan’s attitude toward regulating banking institutions was much like his attitude toward consumer protection.
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Instead of close supervision of the largest and most dangerous banking institutions, he disregarded the growing balance sheets and increasing risk. You do no better. Actually, under your watch each of the major banking institutions failed or would have failed if you didn’t bail them out. On derivatives, Chairman Greenspan and other Clinton Administration officials attacked Brooksley Born when she dared to improve concerns about the growing dangers. They succeeded in changing the statutory regulation to avoid her or other people from effectively regulating derivatives. After taking over the Fed, you didn’t see any need for more substantial regulation of derivatives until it was clear that people were headed to a financial meltdown thanks partly to those products.
The Greenspan policy on transparency was don’t stop talking, use a lot of amounts, but say nothing at all. Things were so very bad one TV network even attempted to think his thoughts by looking at the briefcase he carried to work. You promised Congress more transparency when you emerged to the job, and you promised us more transparency when you arrived begging for TARP. To be fair, you have released some more information than before, but those initiatives are inadequate and you still refuse to provide details on the Fed’s bailouts this past year and on all the dangerous waste you have obtained.
And Chairman Greenspan sold the Fed’s self-reliance to Wall Street through the so-called “Greenspan Put”. Whenever Wall Street needed a lift, Alan there was. Nevertheless, you went far beyond that whenever you bowed to the political pressures of the Bush and Obama administrations and turned the Fed into an arm of the Treasury. Under your watch, the Bernanke Put became a bailout for any large-finance institutions, including many foreign banks.
That should sound familiar, since it was part of your response to a question I asked about the systemic risk of large-finance institutions at your last confirmation hearing. I’m heading to ask that the full answer and question are contained in today’s hearing record. Now, if that statement was true and you had acted according to it, I would be supporting your nomination today.