According to a new Bloomberg poll, 71% of global investors view Ben Bernanke favorably, up from 60% three months ago.
Which brings us to another edition of Taken to Task.
It's no surprise market pros view Bernanke favorably -- the Fed chairman has consistently shown he'll pull out all the stops to help banks and rescue the financial markets when the going gets tough...it's a full-time job!
But I'd like to take Bernanke to task for generally putting the needs of the banks above the need of the American taxpayers, who pay for all the bailouts.
Anyone living on a fixed income has suffered greatly from Bernanke's policies, which punish savers and reward bankers for their bad bets. There's a reason why Bernanke's approval rating in public polls is closer to 30% than 70%.
Bernanke's standing with the American people deserves to take another hit for his attempt to discredit a recent Bloomberg report on the Fed's lending during the crisis.
Bloomberg put the tally of the Fed's loan commitments at $7.7 trillion. The Fed claims it's lending never exceeded $1.5 trillion at any one time, leading Bernanke to complain about "egregious errors" in a letter to four senior lawmakers.
For the record, Bloomberg stands by its reporting. And what the Fed actually lent and what it pledged to lend are two different things - a true apples vs. oranges comparison. Think about the $7.7 trillion like a line of credit from the Fed to the banks, who "only" used $1.5 trillion. I'd like to take Bernanke to task for trying to confuse the issue.
Bernanke's Red Herring
What's really egregious are the Fed's efforts to keep its lending programs secret! Even after battling the Fed in the courts and using the Freedom of Information Act to ferret out the data - information Bernanke claims was always available - Bloomberg had to reverse engineer the numbers to figure out which specific banks were getting what level of loans from the Fed.
All the chatter about the actual size of the Fed's lending during the crisis is a red herring. The real issues are the loans were kept secret and that banks used the Fed funds to lobby against financial reform, a.k.a. the Dodd-Frank bill. Nobody is challenging that claim.
To be fair, Bernanke is merely doing his job as Wall Street's primary benefactor. Remember, the Fed is a private institution, owned by its member banks.
The banks, however, are public institutions and also deserve to be taken to task for keeping shareholders in the dark about their borrowing from the Fed, as The NYT's Gretchen Morgenson detailed this week.
"During the first three months of 2009, for example, when Citigroup's Fed borrowing apparently peaked, Vikram Pandit, its chief executive, hailed the company's performance," she writes. "Calling that first quarter the best over all since 2007, Mr. Pandit said the results showed 'the strength of Citi's franchise.'"
In case you hadn't already guessed, Citi didn't reveal its Fed loans in either its earnings release or its quarterly filing with the SEC, Morgenson reports; other banks kept silent as well.
The NY Times this week also provided details of Wall Street repeated violations of securities law, a graphic representation of the "recidivism" Judge Rakoff cited last week in denying Citigroup's settlement with the SEC.
Why we need a central bank in the first place -- and why there aren't more checks on its power -- is a topic for another day and hopefully will be discussed at this Saturday's GOP debate, co-sponsored by ABC and Yahoo!, my employer.
Until then: Ben Bernanke and your shameless Wall Street pals - you've been Taken to Task.
- Ben Bernanke
- Ben Bernanke