Monday, January 25, 2010

Bernanke Blues

What seemed like a lock a few weeks ago that is Ben Bernanke being confirmed for a second term as chairman of the Federal Reserve now doesn’t seem all that certain.

There was a story about this in the Post on Sunday.

The headline says it all: Political push-back stalls stock market rally on Wall Street

The anger by average Americans has been stocked once again by the huge bonuses that banks will be paying to their employees. This was further reinforced but one of the most tone deaf appearance by bank executives since the big three blew to Washington asking for money. Essentially they said the bonuses were fine. Their tone of we didn’t do anything wrong was a far cry from the last appearance when they needed tax payers money and were contrite . They admitted that they just might have contributed to the economic situation. How quickly things change once the banks are back on their feet because of taxpayers money. The reason they paid the money back so quickly was so they would not be beholden to the public. Once the money was paid back things went back to they way they were before Wall Street help to cause the worst economic crisis since the great depression.

Since the public can’t get to the Wall Street, they can get to the politicians and put pressure on them to do something. And politicians looking around to find someone to blame (excusing themselves of course) have found the perfect scapegoat in Ben Bernanke. So there are questions now being raised by both Republicans and Democrats as to whether Bernake is the right person to be running the Fed right now.

I think the problem started when Time named Bernake it’s man of the year. It put Bernake front and center as the face of what had happened. And then shortly after that we had bonus mania from Wall Street.

Now other political voices are trying to calm the waters. A statement released by Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) and Republican member Judd Gregg (N.H.) stated:

“In the last few days there have been a flurry of media reports on Chairman Bernanke’s confirmation prospects, highlighting a very vocal opposition,” the statement said. “Chairman Bernanke has done an excellent job responding to one of the most significant financial crises our country has ever encountered.”

One aspect of the story is the reaction of people on Wall Street:

“The president is coming out every other day with a new plan -- now he’s going to bully banks,” said Neil Hennessy, who runs an investment firm that bears his name and who thinks a period of slower but steady growth is ahead.

“The only thing that could ruin it is Washington,” Hennessy said. “And a big part of it is we’re getting no clarity out of our Senate, our Congress or our president. Businesses like myself, why would I hire anybody? Because I don’t know what it’s going to cost me anymore, in health care, or whatever.”

And another:

“The markets are wondering, ‘Who’s on first?’ “ said Mark Coffelt, president and chief investment officer of Empiric Funds. “All of the sudden, these guys are out and Volcker’s in. . . . Everyone is scratching their heads and saying, ‘What are these guys doing?’ It’s a pretty ugly picture.”

And this:

“It only took two days after the special election” for the White House to announce a new proposal, said Sean J. Ryan, a banking analyst for Wisco Research. “God knows what we’re in for between now and November.”

Notice something missing. Somehow this is all some else’s fault. Not Wall Street. Not the financial markets. Those meddling politicians. Mixed signals. Nothing absolutely nothing that Wall Street did. My oh my why should anyone be pissed off about millions of dollars in bonuses being paid out when millions of people are out of work. The same arrogant posture from Wall Street of “we know best” is back in full force.

Maybe people wouldn’t be so angry and demand action from their elected representatives if Wall Street and the financial community weren’t completely tone deaf. Guess some things never really change.

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