It’s hard to make up this kind of stuff, so pay attention to the headline and Bernanke’s comments in the story So far, so good, on credit moves: Bernanke says
Federal Reserve Board Chairman Ben Bernanke said the innovative programs he has engineered have been relatively successful to get the markets backed on its feet after being “knocked for a loop” by the financial crisis.
But he admitted the central bank hasn’t done a good job explaining the new policies to Congress or the investing public and said the central bank was designing a new website to help explain the new policies. “We have been encouraged by the responses to these programs,” Bernanke told the House Financial Services panel.
Congress has little oversight of the Fed’s balance sheet. Members of the committee, conditioned to view Fed policy by small moves in its target interest rate, expressed discomfort with the amount of funds that the Fed is pouring into market and the basic fact that markets remain frozen.
“How much more is it going to take?,” asked Rep. Gresham Barrett, Republican of South Carolina.
Bernanke said he didn’t know how much more funds would be needed. “The fact that we haven’t gotten back to normal is just consistent with experience. Financial crises are very serious matters,” he said.
“We are doing this not because we have some nefarious scheme. We are trying to help the American economy recover. And we are using whatever means we have to overcome what has been an enormous blow from this financial crisis,” he said.
My Comment: Bernanke has a nefarious scheme, or he is simply a complete fool. I lean towards the latter.
Congress has been generally quiet about the new programs. Many are not pleased that many of Bernanke’s moves to help particular companies rely on a narrow section of law that allows certain actions only in “unusual and exigent” circumstances.
Bernanke said these loans, about $100 billion to AIG and Bear Stearns, make up only 5% of the Fed’s balance sheet.
My Comment: What about Fannie Mae, Freddie Mac, and the guarantees to Citigroup and Bank of America?
The Fed made these loans with “great reluctance” and they are a bit “less secure,” he said. But Bernanke defended these loans, saying there was no other statute available and markets would have suffered without Fed action.
My Comment: I believe that to be a blatant lie. It makes about as much sense as saying jumping out of a plane 5,000 feet in the air is a bit less secure without a parachute than with one. And if the loans are only “a bit less secure” then why the “great reluctance”?
Earlier this morning, the Fed announced it was willing to expand a new innovative consumer loan program by $800 billion assisted by Treasury funds. This plan will help in the Obama bank rescue package. This plan “will get credit flowing outside the banks,” Bernanke said.
Understanding that his new credit easing policy is hard for members of Congress and the public to understand, Bernanke said the Fed would soon unveil a new website to teach the public about its innovative policy and exploding balance sheet.
The last thing we need to hear is self serving platitudes from Bernanke explaining his innovative policies when it was the Fed’s innovative policies that helped create this mess.
So Far, So Good In Pictures
Bank of America (BAC)
American International Group (AIG)
Fannie Mae (FNM)
So far, So Good, Indeed
Mike “Mish” Shedlock
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