It’s been a great week if your name is “Ben Bernanke.”
On Wednesday, Time Magazine named you “2009: Person of the Year.”
As The Huffington Post reports…
TIME Managing Editor Rick Stengel appeared on the "Today" show Wednesday morning to reveal his magazine's selection for 2009's Person of the Year: Ben Bernanke.
"The winner is Ben Bernanke, Chairman of the Federal Reserve, the most powerful, least understood government force shaping our lives," Stengel said.
Stengel described the cover as a "throwback cover, like a Person of the Year cover from the '40s or '50s."
"He was the great scholar of the Depression, and basically he saw what looked like another Depression coming and he decided he would do whatever it takes to forestall that," Stengel said. "And basically he did."
Then today, The Senate Banking Committee voted to approve Bernanke's reappointment to a second four-year term as Fed chairman.
A Republican, Senator Judd Gregg of New Hampshire, offered a strong endorsement of the nominee. While “mistakes were made” under his purview, Mr. Gregg said, Mr. Bernanke’s swift reaction to the financial crisis had proved crucial. “I tell you, it worked,” he said. “It’s that simple.”
The circle jerk was interrupted, however, by The Wall Street Journal, which continues to cast a wary eye toward the Fed’s policies.
Gerald O’Driscoll writes…
Over the weekend, President Barack Obama went on the offensive against Wall Street for not lending more to Main Street. On CBS's "60 Minutes," the president declared, "I did not run for office to be helping out a bunch of fat cat bankers on Wall Street”….
Wall Street fat cats are always a convenient political target, but bankers are responding to the incentives generated by the economic policies of the Treasury and the Federal Reserve. First and foremost is the Fed's policy of near-zero interest rates.
What this means is that banks can raise short-term money at very low interest rates and buy safe, 10-year Treasury bonds at around 3.5%. The Bernanke Fed has promised to maintain its policy for "an extended period." That translates into an extended opportunity for banks to engage in this interest-rate arbitrage.
Why would a banker take on traditional loans, which even in good times come with some risk of loss? In today's troubled times, only the best credits will be bankable. Meanwhile, financial institutions are happy to service their new, best customer: the U.S. Treasury. That play on the yield curve is open to banks of all sizes.
The Fed's policy makes sense if the goal is restoring bank profitability by generating cash flow. It is a terrible policy if the goal is fueling small business, the engine of economic growth and job creation. Large, nonfinancial corporations have access to banks. They can also tap the public credit markets and have access to internally generated funds. Not so for small business, which depends heavily on banks for credit...
Has recent experience taught the leaders of large financial institutions the need to curb their risk appetite? Not really. The lesson they have learned is that presidents of both parties, the Fed and Congress will come to their rescue when they get in trouble…
Mr. Obama may not have run for president in order to reward them, but that is the effect of his policies.