Theory and Practice on Wall Street and Main Street

I suspect that it is not going to be easy for those of us on Main Street (particularly those pounding the pavements looking for work) to make sense of the Senate proceedings over a vote to approve the nomination of Ben Bernanke for a second term as Chairman of the Federal Reserve. While Chairman of the Senate Banking Committee Chris Dodd opened his hearings by calling Bernanke "the right leader for this moment in our nation's economic history," there are clearly differences of opinion. A good place to find those differences is over at The Beat, the blog on the Web site for The Nation maintained by John Nichols. Nichols has had his hands more than full in trying to bring common-sense signals to all the noise emerging from the debate over health care reform. To the extent that, as I suggested yesterday, such reform is "all about the money," Nichols is now broadening his scope to a debate over the money itself and how it should be regulated. He does not mince words in his review of Bernanke's first term with the Federal Reserve:

Working with the Bush economic team that had rewarded the wealthiest Americans with tax cuts, traded away whole American industries and encourage speculation that would make a blackjack dealer wince, Bernanke's steered trillions of dollars in what were essentially free-money loans and other taxpayer-funded benefits to the flabbiest financial institutions in the world.

And if there was any doubt about where the Fed chair stood in the struggle between Wall Street and Main Street, Bernanke refused to reveal to American citizens or their elected representatives the names of the billionaire boys clubs that pocketed this welfare for the rich.

Bernanke was, and is, the face of everything that is wrong with the crony-capitalism model of "regulation" developed by the Fed under its previous chair, Ayn Rand acolyte Alan Greenspan.

Fortunately, Nichols has at least one Senator who is planning to do his utmost to champion the needs of Main Street:

On Wednesday, [Vermont Senator Bernie] Sanders took advantage of the arcane rules of the Senate -- which allow individual members to block consideration of a presidential selection -- placed a hold on the Bernanke nomination.

Sanders acted for exactly the right reason.

"The American people overwhelmingly voted last year for a change in our national priorities to put the interests of ordinary people ahead of the greed of Wall Street and the wealthy few," Sanders explained. "What the American people did not bargain for was another four years for one of the key architects of the Bush economy."

In particular, on the eves of the White House jobs summit, Sanders is focusing on the Bernanke's failure to demand that Wall Street provide adequate credit to small and medium-sized businesses so that they can retain current workers and create new family-supporting jobs.

"The American people want a new direction on Wall Street and at the Fed," says Sanders. "They do not want as chairman someone who has been part of the problem and who has been responsible for many of the enormous difficulties that we are now experiencing. It's time for a change at the Fed."

Like Nichols, Sanders has also had his hands full with his efforts to bring serious reform to the health care debate. However, while the health care debate has been contaminated by divisiveness at its most emotionally destructive, opposition to Bernanke may be sustained through what Nichols called a "remarkable left-right coalition." This coalition is proposing, through a letter to all members of the Senate, that some hard data be collected prior to any decision on Bernanke's nomination:

At this point, neither the public nor members of Congress has any information about who benefited from these loans, guarantees, and swap arrangements. There is no information available on the specific terms of the loans – the interest rate charged, the collateral posted, and whether or not they were repaid. There is no information available on how it was decided who would qualify for the Fed's help and who would be denied assistance.

Almost three quarters of the members of the House of Representatives have co-sponsored a bill calling for an audit of the Federal Reserve Board. This audit will allow Congress to assess how the Fed, under the leadership of its chairman Ben Bernanke, performed in this crisis and whether it acted appropriately in its disbursement of an enormous amount of money and guarantees.

Without this audit, Congress lacks the information it needs to evaluate Mr. Bernanke's performance. Therefore the Senate should delay action on Mr. Bernanke's reappointment until an audit of the Fed's books takes place, the results are made available to the Congress and Mr. Bernanke answers a serious inquiry into the actions he took.

It is not often that someone like Sanders can find his cause supported by the likes of Phyllis Schlafly and Grover Norquist, although Norquist seems to respect the power of data, perhaps in recognition of his skill at interpreting data for his own ideological purposes. Still, in what may well come down to a debate over whether or not Main Street is getting the fair shake it deserves, there may actually be enough points of agreement between conservatives and liberals to stimulate a review of how the economic crisis has been handled thus far in terms of that fair shake.