the face of evil ben bernanake dares to ask for fed, who caused problem, to have control

http://finance.yahoo.com/news/Bernanke-makes-case-for-apf-1780442849.html?x=0&sec=topStories&pos=3&asset=&ccode=


Bernanke makes case for strong Fed role on banks
Bernanke makes case for strong Fed supervision of banks, need to remain above politics
By Eileen Aj Connelly, AP Business Writer
On 1:33 pm EST, Saturday November 28, 2009
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NEW YORK (AP) -- The chairman of the Federal Reserve is concerned that congressional efforts at financial reform could weaken the central bank's ability to handle future crises and may politicize monetary policy.

Fed Chairman Ben S. Bernanke made the comments in an Op-Ed piece to appear in Sunday's Washington Post, five days before the Senate Banking committee holds a hearing on his nomination for a second term. His current four-year term expires Jan. 31.

Bernanke wrote the nation is challenged to design a financial oversight system that will "embody the lessons of the past two years and provide a robust framework for preventing future crises and the economic damage they cause."

But two proposals being considered "are very much out of step with the global consensus on the appropriate role of central banks, and they would seriously impair the prospects for economic and financial stability in the United States," he said.

The first item in question is a bill before the Senate that would strip the Fed of its bank regulation authority and give the Senate a role in selecting the 12 regional Federal Reserve bank presidents, proposed by Banking Committee Chairman Chris Dodd, D-Conn.

Dodd says his measure would return the Fed to its core mission of setting monetary policy, claiming it proved itself "an abysmal failure" by not cracking down on risky lending practices that led to the financial meltdown.

Bernanke countered that the Fed played "a major part in arresting the crisis."

In what will likely be seen as an implicit defense of Treasury Secretary Timothy Geithner, who was president of the New York Federal Reserve Bank last year, Bernanke said some government actions may have been "distasteful and unfair" but were needed to avoid a global economic catastrophe rivaling the Great Depression.

"My colleagues at the Federal Reserve and I were determined not to allow that to happen," Bernanke wrote.

Notably, he makes no mention of the bill's language that would strip the Fed of consumer protection authorities, which he has previously opposed. That may indicate a concession to political and populist demands for a new pro-consumer agency.

The second piece of legislation Bernanke comments on is an amendment from Rep. Ron Paul, R-Texas, in a House financial regulatory bill that would repeal a 1978 ban on congressional audits of Fed interest-rate decisions.

Paul maintains the repeal would bring more transparency and accountability, and notes it contains language that states it should not be construed as interference in or dictation of monetary policy by Congress.

Bernanke said the Fed's ability to set interest rates and provide stimulus through lending and asset-purchase programs depends upon being able to operate independently of political influence. Opening monetary policy decisions to the scrutiny of Congress "would undermine the confidence the public and the markets have in the Fed to act in the long-term economic interest of the nation."

The Fed chairman recognized that the proposals are in part born of public anger over the financial crisis and the rescues of big financial firms. He said he strongly supports measures to ensure that such interventions never happen again. He wants tougher oversight of large, complex financial firms to make sure that no one company is "too big to fail," and that the costs of future failures are not borne by taxpayers.

"There is a strong case for a continued role for the Federal Reserve in bank supervision," he said, citing expertise needed to supervise "highly complex financial firms" and the information gleaned from regulating banks that is used to set monetary policy. He also pointed to the results of the "stress tests" done on banks earlier this year, maintaining they helped restore public confidence in the banking system.

Associated Press writer Jim Kuhnhenn in Washington contributed to this report.