[PAA-Discuss] BREAKING: Sanders Puts Official Senate Hold on Bernanke Nomination

[Sarah Gonzales]

IAT! (it's about time!)
Let's hear it for bipartisanship! The statement below from Republican,  
Jim Bunning is a jaw dropper, must read, sums it up beautifully.  
Everything is available on CSPAN in case you'd like to see the  
statements to Bernanke in person (priceless). Nomination hearing in  
the AM - look at about 01:12:00 into it if you wanna jump right to it.

Sen. Jim Bunning, Kentucky Republican is joining with Sen. Bernie  
Sanders (I-Vt.), who caucuses with Democrats, to seek to block  
Bernanke's confirmation to a second term atop the Federal Reserve  
Board. Bunning has placed an additional hold on Federal Reserve  
Chairman Ben Bernanke's nomination to a second term.

BREAKING: Sanders Puts Official Senate Hold on Bernanke Nomination
http://www.openleft.com/diary/16291/breaking-sanders-puts-official-senate-hold-on-bernanke-nomination

WASHINGTON, December 2 - Sen. Bernie Sanders (I-Vt.) today placed a  
hold on the nomination of Ben Bernanke for a second term as chairman  
of the Federal Reserve.

"The American people overwhelmingly voted last year for a change in  
our national priorities to put the interests of ordinary people ahead  
of the greed of Wall Street and the wealthy few," Sanders said. "What  
the American people did not bargain for was another four years for one  
of the key architects of the Bush economy."

Bunning places second hold on Bernanke
http://thehill.com/blogs/blog-briefing-room/news/70491-bunning-places-second-hold-on-bernanke

Four years ago when you came before the Senate for confirmation to be  
Chairman of the Federal Reserve, I was the only Senator to vote  
against you. In fact, I was the only Senator to even raise serious  
concerns about you. I opposed you because I knew you would continue  
the legacy of Alan Greenspan, and I was right. But I did not know how  
right I would be and could not begin to imagine how wrong you would be  
in the following four years.

The Greenspan legacy on monetary policy was breaking from the Taylor  
Rule to provide easy money, and thus inflate bubbles. Not only did you  
continue that policy when you took control of the Fed, but you  
supported every Greenspan rate decision when you were on the Fed  
earlier this decade. Sometimes you even wanted to go further and  
provide even more easy money than Chairman Greenspan. As recently as a  
letter you sent me two weeks ago, you still refuse to admit Fed  
actions played any role in inflating the housing bubble despite  
overwhelming evidence and the consensus of economists to the contrary.  
And in your efforts to keep filling the punch bowl, you cranked up the  
printing press to buy mortgage securities, Treasury securities,  
commercial paper, and other assets from Wall Street. Those purchases,  
by the way, led to some nice profits for the Wall Street banks and  
dealers who sold them to you, and the G.S.E. purchases seem to be  
illegal since the Federal Reserve Act only allows the purchase of  
securities backed by the 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 after  
you were promoted. The most glaring example is it took you two years  
to finally regulate subprime mortgages after Chairman Greenspan did  
nothing for 12 years. Even then, you only acted after pressure from  
Congress and after it was clear subprime mortgages were at the heart  
of the economic meltdown. On other consumer protection issues you only  
acted as the time approached for your re-nomination to be Fed Chairman.

Alan Greenspan refused to look for bubbles or try to do anything other  
than create them. Likewise, it is clear from your statements over the  
last four years that you failed to spot the housing bubble despite  
many warnings.

Chairman Greenspan’s attitude toward regulating banks was much like  
his attitude toward consumer protection. Instead of close supervision  
of the biggest and most dangerous banks, he ignored the growing  
balance sheets and increasing risk. You did no better. In fact, under  
your watch every one of the major banks failed or would have failed if  
you did not bail them out.

On derivatives, Chairman Greenspan and other Clinton Administration  
officials attacked Brooksley Born when she dared to raise concerns  
about the growing risks. They succeeded in changing the law to prevent  
her or anyone else from effectively regulating derivatives. After  
taking over the Fed, you did not see any need for more substantial  
regulation of derivatives until it was clear that we were headed to a  
financial meltdown thanks in part to those products.

The Greenspan policy on transparency was talk a lot, use plenty of  
numbers, but say nothing. Things were so bad one TV network even tried  
to guess his thoughts by looking at the briefcase he carried to work.  
You promised Congress more transparency when you came to the job, and  
you promised us more transparency when you came begging for TARP. To  
be fair, you have published some more information than before, but  
those efforts are inadequate and you still refuse to provide details  
on the Fed’s bailouts last year and on all the toxic waste you have  
bought.

And Chairman Greenspan sold the Fed’s independence to Wall Street  
through the so-called “Greenspan Put”. Whenever Wall Street needed a  
boost, Alan was there. But you went far beyond that when 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 all large financial institutions,  
including many foreign banks. And you put the printing presses into  
overdrive to fund the government’s spending and hand out cheap money  
to your masters on Wall Street, which they use to rake in record  
profits while ordinary Americans and small businesses can’t even get  
loans for their everyday needs.

Now, I want to read you a quote: “I believe that the tools available  
to the banking agencies, including the ability to require adequate  
capital and an effective bank receivership process are sufficient to  
allow the agencies to minimize the systemic risks associated with  
large banks. Moreover, the agencies have made clear that no bank is  
too-big-too-fail, so that bank management, shareholders, and un- 
insured debt holders understand that they will not escape the  
consequences of excessive risk-taking. In short, although vigilance is  
necessary, I believe the systemic risk inherent in the banking system  
is well-managed and well-controlled.”

That should sound familiar, since it was part of your response to a  
question I asked about the systemic risk of large financial  
institutions at your last confirmation hearing. I’m going to ask that  
the full question and answer be included in today’s hearing record.

Now, if that statement was true and you had acted according to it, I  
might be supporting your nomination today. But since then, you have  
decided that just about every large bank, investment bank, insurance  
company, and even some industrial companies are too big to fail.  
Rather than making management, shareholders, and debt holders feel the  
consequences of their risk-taking, you bailed them out. In short, you  
are the definition of moral hazard.

Instead of taking that money and lending to consumers and cleaning up  
their balance sheets, the banks started to pocket record profits and  
pay out billions of dollars in bonuses. Because you bowed to pressure  
from the banks and refused to resolve them or force them to clean up  
their balance sheets and clean out the management, you have created  
zombie banks that are only enriching their traders and executives. You  
are repeating the mistakes of Japan in the 1990s on a much larger  
scale, while sowing the seeds for the next bubble. In the same letter  
where you refused to admit any responsibility for inflating the  
housing bubble, you also admitted that you do not have an exit  
strategy for all the money you have printed and securities you have  
bought. That sounds to me like you intend to keep propping up the  
banks for as long as they want.

Even if all that were not true, the A.I.G. bailout alone is reason  
enough to send you back to Princeton. First you told us A.I.G. and its  
creditors had to be bailed out because they posed a systemic risk,  
largely because of the credit default swaps portfolio. Those credit  
default swaps, by the way, are over the counter derivatives that the  
Fed did not want regulated. Well, according to the TARP Inspector  
General, it turns out the Fed was not concerned about the financial  
condition of the credit default swaps partners when you decided to pay  
them off at par. In fact, the Inspector General makes it clear that no  
serious efforts were made to get the partners to take haircuts, and  
one bank’s offer to take a haircut was declined. I can only think of  
two possible reasons you would not make then-New York Fed President  
Geithner try to save the taxpayers some money by seriously negotiating  
or at least take up U.B.S. on their offer of a haircut. Sadly, those  
two reasons are incompetence or a desire to secretly funnel more money  
to a few select firms, most notably Goldman Sachs, Merrill Lynch, and  
a handful of large European banks. I also cannot understand why you  
did not seek European government contributions to this bailout of  
their banking system.

 From monetary policy to regulation, consumer protection,  
transparency, and independence, your time as Fed Chairman has been a  
failure. You stated time and again during the housing bubble that  
there was no bubble. After the bubble burst, you repeatedly claimed  
the fallout would be small. And you clearly did not spot the systemic  
risks that you claim the Fed was supposed to be looking out for. Where  
I come from we punish failure, not reward it. That is certainly the  
way it was when I played baseball, and the way it is all across  
America. Judging by the current Treasury Secretary, some may think  
Washington does reward failure, but that should not be the case. I  
will do everything I can to stop your nomination and drag out the  
process as long as possible. We must put an end to your and the Fed’s  
failures, and there is no better time than now.
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