Editorial: Sanders omits half the story on Bernanke's nomination
Vermont’s Sen. Bernie Sanders efforts to block Ben Bernanke’s nomination for a second term as chairman of the Federal Reserve make a point, but in doing so he omits more than half of the story.Sanders suggests that Bernanke should not be confirmed for a second term based on the premise that “the American people voted last year for a change in our national priorities to put the interests of ordinary people head of the greed of Wall Street and the wealthy few. What the American people did not bargain for was another four years for one of the key architects of the Bush economy.”It’s true that change was a primary focus of the 2008 election. And, in light of the economic disaster created by lax government regulation and excessive greed within Wall Street’s financial district, it’s true that Americans were in no mood to lavish more riches on the nation’s biggest banks. A new populism was part of the uprising that helped elect President Barack Obama and give Democrats solid control of the House and Senate.But that premise is not grounds for opposing the nomination of one of the few Americans who worked tirelessly for the past 18 months to prevent what could have been a much worse economic scenario. Many economists have given Bernanke high marks for his steady hand at the Federal Reserve in the face of extremely difficult, and fragile, circumstances. Americans should also understand that Bernanke’s first concern was helping to rescue the economy’s infrastructure — the building blocks that keep money moving throughout the nation and the world. Without that structure being sound, all else goes down the drain (and with it all the social programs that progressives like Sanders are keen to protect.) In criticizing Bernanke, Sanders glazes over the difficult and uncertain battles of the moment — like a Monday-morning quarterback — and makes his suggestions sound as if they were obvious no-brainers at the time. Such grandstanding may boost Bernie’s image as a populist/socialist that continues to rail against the wealthiest few, but he could have made his points more effectively with a modicum of tolerance and grace.He argues, for example, that Bernanke could have — under Bush in 2006 — demanded that Wall Street provide adequate credit to small and medium-sized businesses to create decent-paying jobs in a productive economy and that he could have insisted that large bailed-out banks end the usurious practice of charging interest rates of 30 percent or more on credit cards. Sanders also noted that Bernanke could have broken up too-big-to-fail financial institutions that took Federal Reserve assistance, and that he could have revealed which banks took more than $2 trillion (collectively) in taxpayer-back loans. Bernanke chose to do none of those things.Sanders also rightly notes that it was under Bernanke that risky derivatives at the nation’s top commercial banks grew from $110 trillion to more than $290 trillion. And Sanders alleges that under Bernanke mortgage lenders were allowed to issue predatory loans consumers could not afford to repay, even after the FBI warned in 2004 of an ‘epidemic’ in mortgage fraud.But Sanders’ criticism misses the mark by half. The other part of the story is that the nation, and world, averted an economic meltdown — partly because of Bernanke’s leadership; and it is foolish to suggest that Bernanke was responsible for the trends in derivatives and fraudulent mortgage deals that had been growing long before his tenure began. Rather than protest his nomination for a second term, Sanders would have been more effective had he tipped his hat to the difficulties Bernanke endured, then couched his points as measures Bernanke should be encouraged to do in his next term.That may well be the end result of Sanders’ theatrics, and if so, some benefit from Sanders’ antics may yet be served.