News Release

LEFT-RIGHT COALITION SAYS SENATE BANKING COMMITTEE MUST DELAY VOTE ON BERNANKE RENOMINATION

Letter Sent To Committee in Advance of Thursday Hearing; Group Also Behind Effort to Audit Actions of Federal Reserve at Early Stages of Financial Crisis

WASHINGTON – In a letter to members of the Senate Banking Committee today, a coalition of liberal and conservative leaders, strategists, activists and public interest advocates called for a delay of the nomination of Federal Reserve chairman Ben Bernanke to a second term.

The coalition includes Campaign for America’s Future co-director Robert Borosage, Americans for Tax Reform president Grover Norquist, Campaign for Liberty president John Tate, Center for Economic and Policy Research co-director Dean Baker and FreedomWorks president Matt Kibbe.

Borosage said it’s simply astounding that the Banking Committee plans to vote on Bernake’s nomination for another term after only a couple of hours of desultory hearings with the chairman.

“We know that Bernanke’s errant views contributed directly to the worst financial collapse since the Great Depression,” said Borosage. “He was blind to the housing bubble, wrong on the dangers of unregulated over-the-counter derivative trading, wrong on the scope of the crisis once it began, and was late to respond.”

Borosage said that at the very least, the Senators should probe why Bernanke was so wrong, what in his ideology and worldview was mistaken and how has he adjusted his position.

“This is not ‘Monday morning quarterbacking,’ in the inane words of Sen. Evan Bayh,” said Borosage. “It is vital to any judgment of the Bernanke nomination – and any notion of accountability.”

The Federal Reserve took unprecedented actions in an attempt to prevent widespread financial collapse and the letter calls for a full review and accounting of the trillions of dollars committed to private institutions before moving to nominate Bernanke to a second term. Bernanke has opposed such a review, and has declined questions from Congress about the taxpayer dollars lent by the Federal Reserve to banks and other private entities.

“Bernanke outrageously alleges that this would constitute a ‘takeover of monetary policy,’” said Borosage. “But the unprecedented steps taken in the bailout are a far remove from monetary policy. It is disingenuous at best to conflate the two.”

The complete letter follows:

December 15, 2009

Dear Members of the U.S. Senate Banking Committee:

We strongly urge the Senate Banking Committee to delay its vote on the nomination of Ben Bernanke to a second term as Chairman of the Federal Reserve. The Federal Reserve played a central role in the events leading up to the economic crisis and the subsequent response to it. Before deciding to reappoint him to the country’s most important economic policy-making position, the Senate should thoroughly review the conduct of the Federal Reserve under his leadership. Specifically, the Senate should have a more thorough knowledge of the actions that Mr. Bernanke took as Chairman during this economic crisis that involved actual or potential commitments of literally trillions of dollars to private financial institutions and foreign central banks.

These actions have remained secret. Congress needs to know who received the benefit of the Fed’s support as well as the terms of those deals. Who was denied support and for what reason? Congress regularly scrutinizes spending sums that are less than one thousandth of the amount that the Fed made available during the crisis. It is inconceivable that the Senate can offer its advice and consent on Mr. Bernanke’s nomination without some greater knowledge of his actions.

During the crisis, the Federal Reserve and Treasury worked together in the emergency, making decisions on an ad hoc basis. The terms and conditions of these decisions must be probed. For example, what was the arrangement made with Citibank by the Treasury and the Federal Reserve? What negotiations actually took place in relation to Goldman Sachs and other AIG counterparties? The Senate Committee should demand a full investigation of those transactions, including an investigation of the contemporaneous documents and notes.

During the crisis, the Federal Reserve made swap arrangements that could have led to the transfer of hundreds of billions to foreign banks. Surely taxpayers have every reason to know under what terms, what authority, and for what reasons the Federal Reserve decided to make available huge sums to foreign banks.

These are indicative of the serious questions that should be probed before Mr. Bernanke’s nomination is voted upon by the Committee. We simply cannot go through the worst financial crisis in generations and rubber stamp the nomination of the Chairman who was at the helm when the ship hit the iceberg.

In addition, we believe no further action should be taken on Chairman Bernanke’s nomination until S. 604 receives a stand-alone vote in the Senate.

Sincerely,

Dean Baker, co-director, Center for Economic and Policy Research
Robert Borosage, co-director, Campaign for America’s Future
Danielle Brian, executive director, Project on Government Oversight
Tom DeWeese, president, American Policy Center
Sandra Fabry, executive director, Center for Fiscal Accountability
Terry Francke, general counsel, Californians Aware
Gary Kalman, Washington Director, Public Interest Research Group
Matt Kibbe, president, FreedomWorks
Leland Lehrman, president, Mother's Arms
Chuck Muth, president, Citizen Outreach
Grover Norquist, president, Americans for Tax Reform
John Richard, director, Essential Information
David Swanson, cofounder, AfterDowningStreet.org
John Tate, president, Campaign for Liberty
Rob Weissman, president of Public Citizen
John Whitehead, president of The Rutherford Institute