Gentle Ben on the Hill for renomination hearing

Update 2: This afternoon we learned:

Bob Corker R-TN really has a great head on his shoulders. I remember when he tried valiantly to work out a deal on GM before they wound up doing a giant interventionary bailout instead. He zeroed in on a huge issue with Ben. What is the Fed’s expectation on how interest rates will react when the FED MBS purchase plan ends in March. Corker said it would be incredibly important to know if indeed you really plan to end those MBS purchases from FAN FRED etc in March, some folks expect interest rates to rise quite high as a result (yes above 6% fer shure I would think, that being the number used in all the housing recovery models 6% max rates for 2010-MiM)

Ben would not give a real answer. He basically said, we have been slowly winding down our MBS purchases and we have not seen any big jump in mortgage interest rates yet and when we end the program in March if circumstances change we will act then.

When asked the biggest things that might interfere with the recovery Ben did not mention housing. So he is still blind there. That was evident in his response to Corker. He really did not acknowledge the HUGE LOOMING inventory spike that will follow the housing mods that don’t make it to permanent status reentering foreclosure combined with interest rates above 6% and falling values will stop purchases (and of course so will unemployment). He said FWIW IOW eh, we’ll cross that bridge IF we come to it.

Ben, Ben, the bridge is washed out and you are GALLOPING toward it!

I know a lot of conservatives don’t like Michael Bennett R-UT but he did make the key inflation argument, we will post that as well.

To cap this afternoon Chief of WH Council of Economic Advisers (somehow she and Larry have almost identical titles, and if you don’t think Larry is hogging the decisions, you don’t know Larry, the only saving grace about Tim Geithner (and Ben!! but I do like Ben) is they are not Larry) Christy Romer spoke to Maria Bartiromo on the jobs summit ideas and Tim Geithner just spoke to Liz Claman on FOXBiz and based on what they said they do indeed plan to let the Bush Tax cuts expire and there was no mention of   a payroll tax cut.

When Obama spoke he talked about Cash for Caulkers (which actually IS a good idea, and Big Dawg suggested it to the WH with papers on its costs and suggested using TARP funds for it) but the rest was about how his previous plans have worked so well he cited the CEO of Liz Claiborne, and how they will Green Tech the economy and possibly offer hiring tax credits. NOTHING ABOUT PAYROLL TAX HOLIDAY, GIVE US OUR MONEY BACK! We will post clips.

Update: From the first hour of testimony we learned:

Chris Dodd does not know who Dr Doom is. The head of the Banking Cmte mentions ‘an economist named Nouriel Roubini’ and says he hopes he pronounced his name right . So again a middle aged housewife in AZ , moi, knows more about the current state of the economic debate than our Congressional leadership, fabulous.

Pretty gentle until Jim Bunning R-KY. As expected Jim laid Ben out in a 15 minute soliloquy on his failures and Greenspan’s before him. In fact he called Ben ‘Greenspan’ and the entire room laughed.

I am reminded again why I like Evan Bayh D-IN. He was our pick for HRC VEEP. He follows Bunning. He acknowledges the round robin of errors and asks pertinent insightful questions , he notes he would prefer to have Ben there he knows Ben will not make the AIG mistake again, He asks about the proposed loss of access of the FED to the banks financial state if Dodd’s proposed stripping of regulatory authority from the Fed (Dodd keeps following all the questioners to gently argue with Ben that his plan to model our FED after the UK model would not have precluded the FED from its actions following 9/11 as Ben surmises) would be a problem. Ben says in his thorough thoughtful articulate way (whatever else you can say Ben is incredibly smart about economics, just myopic as to the limits of what they can predict as are IMo all scientists of any field) hell yes it is a problem, the UK model failed, those Euro countries Dodd is citing are moving back towards OUR US model he says. Bayh and Schumer now have heads together nodding as Dodd is off rambling about his grand plan again. Clearly Schumer and Bayh are not down with Dodd’s shortsighted plan to strip the FED of its regulatory powers, good.

Dodd following up to argue the point AGAIN (he doesnt know who Nouriel Roubini is but he thinks he can rewrite our FED regulations following the ‘Eruopean model’ he keeps mentioning ‘other G8 countries’ just say Europe Chris! In fact Dodd went out of his way to agree with Bunning on AIG of all things and whined that while all the talk was of the AIG bonuses (BWAAA yeah its in his head baby) the fact that the Fed paid par on the AIG CDS’ was the real issue.

Ben says he does not abuse his regulatory authority and could not control foreign banks on the negotiations to take less. Dodd bemoans the fact that Ben didnt abuse his authority there.

And while Ben waived the chance to talk tax cuts forcefully when reminded Greenspan did it, he said he Ben would not address that, he also waived the chance to say the stimulus worked and said only 30% has been spent it is too early to judge the impact and he said too early to discuss more spending, and entitlements need to be brought in line with a deficit that is no more than 2-3%of GDP going forward.

CNBC will Live Stream the hearings when they begin.

Having Dodd question Ben should be fun though for the sheer HYPOCRISY of it all, it will be a wonder if lightning does not strike Dodd when he tries to be stern to suck up to pixxed CT voters..


…While his confirmation does not appear in doubt, that popular discontent is likely to translate into aggressive, even hostile questioning on Thursday when Bernanke testifies before the Senate Banking Committee in a bid to win confirmation to a fresh four-year stint as Fed chairman.The panel must approve his nomination before sending it to the full Senate for a vote. His term expires on Jan. 31. It is unclear when the panel will act on the nomination.

“My guess is he’ll be confirmed, but he’ll take a lot of flak,” said Allan Meltzer, a professor of economics at Carnegie Mellon’s Tupper School of Business in Pittsburgh and an expert on the Fed’s history. “We’re in a bad period and the public is very unhappy. So that comes out in the Congress.”..

Wow, even the WSJ op ed has come out against him:

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.

…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.

Neither did I! AHA!! J’accuse!!! Per the transcripts it WAS Ben ably assisting and even ENCOURAGING Greenspan’s reckless looseness! Maroons!

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….

Go read the whole thing!

December 3, 2009. Tags: , , , , , , , , , , , , , . Economy, Finance, Foreclosures, Housing, Obama Administration, Politics, TARP, Taxes, Unemployment Statistics, Wall St. 2 comments.

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