Hold The Fed Accountable

The Fed Accountability Fight Is Not Over

Isaiah J. Poole — Thu, 28 Jan 2010 14:29:02 -0500

Though progressives have not succeeded in blocking Ben Bernanke's renomination as chairman of the Federal Reserve—which was always a long-shot proposition—we now have on the historical record a detailed critique of his record during the financial crisis that we might not have had if a few key senators—starting with independent Vermont Sen. Bernie Sanders—had not raised a roadblock to the renomination rush.

Still, a detailed critique on the Senate floor is not an audit of the Federal Reserve. We still do not have answers to key questions about the commitments made with taxpayer dollars to prop up Wall Street. Taxpayers deserve those answers, and that is why the fight must continue to have the Senate adopt the provision in the already-passed House financial reform bill that would allow for an audit that answers those questions.

"It is incomprehensible to me that the chairman of the Fed could lend out trillions of dollars" to Wall street financial institutions "and when I asked [Bernanke] who got the money, he said, 'Sorry, the American people don't have the right to know that,' in so many words. 'I'm not telling you.' How can you have confidence in the leadership of the Fed when there is no transparency?"

Bernanke has offered some superficial nods toward transparency, but even those are less than meets the eye. In the wake of the controversy over orders from the New York Fed that AIG not disclose payments of federal dollars to banks to cover their losses on deals they had with AIG, Bernanke agreed to allow a Government Accountability Office audit of the AIG bailout. The truth is, as the Wall Street Journal pointed out, all Bernanke was really doing was inviting the GAO to do something that it already had the right to do.

What neither the GAO nor anyone else has the authority to do today is to open the Fed's books and get an unfettered view of where our money has gone and why.

A major obstacle to allowing that to happen is Sen. Christopher Dodd, D-Conn., the chairman of the Senate Banking Committee and a big booster of Bernanke during the confirmation process. In addition to heaping praise on Bernanke on the Senate floor today, Dodd, according to a report in The Huffington Post, was actively working to keep the House-passed audit language from appearing in the Senate's financial reform bill.

So we will have to keep the issue alive, calling members of the Senate and letting them know that now that you have agreed to renominate Ben, it is time to audit Ben.

Bernanke Whip Count Update: 38 Senators Still Up In The Air

Bill Scher — Wed, 27 Jan 2010 11:11:34 -0500

It's been 24 hours since Campaign for America's Future and Open Left launched the "Bernanke Whip Count," enlisting the grassroots to find out where Senators really stand, and help target our efforts to demand accountability before approving his nomination for another term helming the Fed.

Today's whip count tally shows there are 38 senators whose positions have not been stated, keeping Bernanke from claiming firm majority support.

Now, it appears Bernanke will be confirmed tomorrow. Sen. Harry Reid has scheduled a cloture vote and news reports indicate some Senators will do what they would not do for the Recovery Act or health care -- vote to end a filibuster while voting "No" on the nomination, allowing Bernanke to be confirmed by a simple majority, not a supermajority.

But our tally shows he still doesn't have a simple majority in hand.

We still have another 24 hours to whip the 38 undeclared Senators. Use our Bernanke Whip Count online tool to report your findings. The remaining Senators are:

AK - Begich (D) (202) 224-3004
AK - Murkowski (R) (202) 224-6665
AR - Lincoln (D) (202) 224-4843
AR - Pryor (D) (202) 224-2353
CO - Udall (D) (202) 224-5941
DE - Kaufman (D) (202) 224-5042
FL - LeMieux (R) (202) 224-3041
GA - Chambliss (R) (202) 224-3521
GA - Isakson (R) (202) 224-3643
IA - Grassley (R) (202) 224-3744
ID - Risch (R) (202) 224-2752
IL - Burris (D) (202) 224-2854
KS - Brownback (R) (202) 224-6521
KS - Roberts (R) (202) 224-4774
KY - McConnell (R) (202) 224-2541
MD - Mikulski (D) (202) 224-4654
MI - Levin (D) (202) 224-6221
MI - Stabenow (D) (202) 224-4822
MN - Franken (D) (202) 224-5641
MO - Bond (R) (202) 224-5721
MO - McCaskill (D) (202) 224-6154
MS - Cochran (R) (202) 224-5054
NH - Shaheen (D) (202) 224-2841
NJ - Lautenberg (D) (202) 224-3224
NM - Udall (D) (202) 224-6621
NY - Gillibrand (D) (202) 224-4451
OK - Coburn (R) (202) 224-5754
OR - Wyden (D) (202) 224-5244
PA - Casey (D) (202) 224-6324
PA - Specter (D) (202) 224-4254
RI - Whitehouse (D) (202) 224-2921
SD - Thune (R) (202) 224-2321
VA - Webb (D) (202) 224-4024
VT - Leahy (D) (202) 224-4242
WA - Cantwell (D) (202) 224-3441
WA - Murray (D) (202) 224-2621
WY - Barrasso (R) (202) 224-6441
WY - Enzi (R) (202) 224-3424

Bernanke Cloture Vote on Thursday

Robert Borosage — Wed, 27 Jan 2010 08:53:23 -0500

From Politco’s Playbook: On the pending vote to confirm Fed Chair Ben Bernanke to a second term:

A senior administration official, from downtown: “It's amazing that Senate Rs can barely muster a majority for a Republican who was named TIME's ‘Man of the Year’ and who served in the Bush White House, was appointed to his current job by President George W. Bush and has the full support of the U.S. Chamber of Commerce and Main Street American business. And their main complaint is that he saved the world from what Jim Cramer has called the ‘financial stone age.’ Is the minority leader Ron Paul? Someone's learned the wrong lesson from the MA race and it's not President Obama."

What’s amazing is that Democrats will provide more support than Republicans for:

*A Republican who served in the Bush White House, was appointed to his current job by a failed president, has the full support of the Chamber of Commerce and Wall Street.

* Championed the market fundamentalism and financial deregulation that led to the financial collapse.

* Refused to recognize or act on a housing bubble inflated by systematic fraudulent mortgage practices that he had the power to regulate.

* Reassured worried legislators that the deriviatives market was safe, with its players sophisticated investors that knew the risks and could take their losses.

* Committed trillions of dollars without a vote of Congress to private financial institutions here and abroad – and now refuses independent audit and congressional investigation because that would infringe “monetary policy."

* Opposes the president’s core financial reforms, arguing that the Fed Reserve should remain the key regulator despite its self evident failure to use its powers under his watch.

* Has been central to rescuing the banks in a manner that has left them more concentrated, now with an explicit promise that they are too big to fail, and stands by as they reopen the casino, while refusing to increase lending to the real economy.

Someone’s learned the wrong lesson from the Massachusetts race and it is not faux populist Republicans.

Bernanke Vote: Where Does Your Senator Stand?

Robert Borosage — Mon, 25 Jan 2010 16:13:29 -0500

Is your senator going to vote this week to re-appoint Ben Bernanke to run the Federal Reserve, without demanding any accountability for actions before and during the financial crisis?

Let's find out today, so we know whom to target before the vote. We're asking progressive activists to join the "Bernanke Whip Count."

The Campaign for America's Future is partnering with OpenLeft.com on the "Bernanke Whip Count" to find out who is blindly supporting the Fed Chairman, so we can maximize grassroots pressure for accountability.

With anger at the bank bailout red hot, Bernanke's re-appointment is no longer a sure thing. And the fear rhetoric is flying to save his nomination; tthat we somehow face economic apocalypse if we demand basic accountability.

What's scary is re-appointing someone to one of the most powerful positions in the world without getting basic answers about his record.

How can the Senate vote for Bernanke without:

Launching a comprehensive investigation into the Fed's role in the bailout of insurance giant A.I.G. and the big banks. Taxpayers are on the hook for hundreds of billions for AIG; big banks got paid off dollar for dollar. How does that make sense?
Requiring an audit of the Fed. Trillions were used to backstop American and foreign financial institutions. What were the terms? Who got helped and who got shafted and why? The Fed can’t commit literally trillions with no accountability whatsoever.
Demanding a detailed admission of responsibility from Bernanke showing he understands how he missed the housing bubble, and how he will change his approach to managing the economy.
Probing Bernanke’s views on reform. Bernanke has opposed the administration’s reform package, including the Consumer Financial Protection Agency, crucial to protecting consumers from credit card and bank abuse.

Hailing Bernanke for his work in saving the banking system from collapse is a bit like celebrating an arsonist for helping to put out the fire that he set.

It is simply inconceivable that senators would confirm Bernanke to another term as Chair of the Federal Reserve without demanding basic accountability – accountability that Bernanke has thus far blocked.

If Bernanke isn¹t held accountable for his actions and if he decides heads of banks don't need to be held accountable either, then who is accountable?

Without accountability, Wall Street will remain one giant casino gambling with all of our livelihoods and hurtling towards the next crisis.

Accountability starts with us. Get involved.

STATEMENT OF ROBERT BOROSAGE ON BERNANKE RENOMINATION

Toby Chaudhuri — Wed, 16 Dec 2009 16:05:27 -0500

As Prepared for Delivery
Capitol Visitor Center, Washington, D.C.

We are one of 17 groups, drawn from across the political spectrum, that have urged the Senate Finance Committee to investigate Ben Bernanke before they vote on his nomination. A copy of our letter submitted to Chairman Chris Dodd is available on our web site, at ourfuture.org. The House of Representatives has now passed legislation requiring an audit of the Federal Reserve. Ben Bernanke opposes that audit. We urge the Senate Committee to put off voting on Bernanke’s nomination until that audit is done.

VIDEO

Click here to watch C-Span video of the news conference featuring Robert Borosage; Sen. Bernie Sanders, I-Vt.; and William Black, associate professor of Economics and Law at the University of Missouri–Kansas City.

Demanding an investigation of the Fed and a probe of Bernanke’s views is simple common sense.

Bernanke was head of the Federal Reserve when it contributed directly to the worst financial calamity since the Great Depression. And he got it wrong. He failed to recognize an $8 trillion housing bubble. He failed to use the Fed’s extensive regulatory powers to curb speculation. He opposed regulation of derivatives, arguing that credit default swaps and the like were only used by sophisticated investors who knew the risks. When the housing bubble burst, he failed to understand its seriousness. He was wrong about the strength of the banks, wrong about the effects of the crisis and slow to see the economy was imploding.

The Federal Reserve is mandated to preserve maximum employment and price stability. We have just experienced the biggest spike in unemployment since World War II. The Federal Reserve, and Bernanke, contributed directly to that calamity.

Alan Greenspan, former head of the Federal Reserve, went to the Congress to admit that his world view was wrong. It is vital that the Senate probe Ben Bernanke. Why was he so wrong? What in his world view was mistaken? What has he learned from those mistakes? This is not “Monday morning quarterbacking” as some would call it. It is utterly essential if the Senate is to have any sense of whether to trust Bernanke with leadership of the Federal Reserve going forward.

Once the banking system was in free fall, Bernanke acted boldly and in conjunction with Treasury Secretaries Hank Paulson and Tim Geithner. He transferred hundreds of billions of dollars to private banks, brokerages and insurance companies in exchange for dubious collateral. He transferred hundreds of billions to foreign banks and foreign central banks.

This may have been heroic, as Time Magazine suggests in naming him “Man of the Year,” which is something like celebrating an arsonist for his heroism in putting out the fire that he helped to start.

But whether heroic or not, Bernanke’s actions in response to the calamity were not normal monetary policy. The Federal Reserve has literally picked winners and losers, among industries and among companies. Why? What were its criteria? What were the conditions? What was the price of the collateral?

None of this is known. Bernanke says that to audit his actions would constitute a “takeover of monetary policy.” With all due respect, this is disingenuous, if not dishonest.

The emergency measures that hurled hundreds of billions to private financial institutions are a far remove from determining what interest rates are. These measures may have been necessary, but they cannot be secret. They particularly can’t be secret when a large portion of the Fed’s expertise in this area resides in the NY Federal Reserve Bank which is dominated by Wall Street bankers. As former Fed Chair Paul Volker says, to intervene in particularly sectors of the market is not the proper role of the central bank. “It could only be justified in extreme emergency.” The calamity may have justified action; but it cannot justify keeping that action secret.

Whether Senators celebrate Bernanke’s performance as head of the Federal Reserve or not, it is simply inconceivable in a constitutional Republic that a central bank could, without a vote of Congress, decide to commit trillions of dollars to private financial institutions and block any independent audit of its measures. Congress has, in the words of Martin Mayer, not merely the right, but the obligation to audit the Federal Reserve. And it is simply irresponsible to vote on his nomination with investigating what he did with the emergency powers that he asserted.

# # #

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

Isaiah J. Poole — Tue, 15 Dec 2009 15:31:11 -0500

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

# # #

Americans Don't Have Jobs; Will Ben Keep His?

Isaiah J. Poole — Thu, 03 Dec 2009 15:13:41 -0500

Bernanke: 'The Definition Of Moral Hazard'

Isaiah J. Poole — Thu, 03 Dec 2009 10:02:49 -0500

Federal Reserve Chairman Ben Bernanke employed his characteristic smoothness and conciliatory nature as he navigated the questioning at today's confirmation hearing before the Senate Banking Committee, helped by the largely gentle questioning by Democrats on the committee.

Ironically, the most pointed progressive critique of Bernanke's stewardship of the Fed did not come from any of the Democrats but from the far right.

Ultraconservative Sen. Jim Bunning, R-Ky., used his first opportunity to address Bernanke to run down the list of failures that took place under Bernanke's watch, including his implementation of policies at the Fed that clearly signal that "just about every large bank, insurance company and even some industrial companies are too big to fail."

His statement went on to say, "Rather than making management, shareholders and debt holders feel the consequences of their risk-taking, you bailed them out. In short, you are the definition of moral hazard."

Bernanke's hearing was preceded by the bold decision by Sen. Bernie Sanders, I-Vt., to place a hold on the renomination. Sanders said in a statement:

As head of the central bank since 2006, Bernanke could have demanded that Wall Street provide adequate credit to small and medium-sized businesses to create decent-paying jobs in a productive economy, but he did not. 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, but he did not. He could have broken up too-big-to-fail financial institutions that took Federal Reserve assistance, but he did not. He could have revealed which banks took more than $2 trillion in taxpayer-backed secret loans, but he did not.

At the same time, the Campaign for America's Future and other progressive organizations forged an unlikely coalition with some of their ideological foes on the right, including conservatives Grover Norquist and Phyllis Schafly, and sent a letter to the Senate urging members not to confirm Bernanke before it commits to opening the Fed's books. Such a provision already has overwhelmingly support in the House. The letter notes that during the financial crisis the Fed made loan commitments that exceed the size of the total federal budget, yet:

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.

America's Future co-director Robert Borosage said that "other Senators should be encouraged to join Sanders in demanding a full investigation before consideration of the Bernanke nomination."

But Banking Committee chairman Christopher Dodd, D-Conn., set a disappointing tone to the hearings early by announcing, within the first five minutes, that "I will vote to support your nomination, because I believe that you are the right leader for this moment in our nation's economic history and I think your reappointment sends the right signal to the markets."

Dodd's own opening statement detailed some of the reasons why Bernanke's renomination should not be a done deal:

[F]or many years many of us in the Senate have been frustrated in our efforts to get the Fed to address predatory lending, and the Federal Reserve failed to develop meaningful mortgage regulations until after the housing bubble burst.

There have been other lapses in consumer protection, with the Fed doing little over the years to protect users of credit card and checking accounts from abusive company practices.

In addition, the Fed failed to rein in excessive risk-taking by some of the largest holding companies which it supervised. Many of the firms whose irresponsible actions contributed to the crisis and ultimately required a taxpayer-funded bailout did so under the Fed's watch.

Dodd also asked a good question when he challenged Bernanke's resistance to legislation that would reduce the Fed's role in supervising the banking system by, for example, creating a new consumer watchdog agency. The toxic mix of a predator mentality and a casino atmosphere in the banking system that were at the root of the financial crisis would not have flourished as unchecked as it did if there had been effective cops on the beat. And since the Fed was that cop, why should the Fed continue to be entrusted with that role?

Bernanke's answer was that the Fed has "unparalleled expertise" in banking—unsaid, by the way, is that expertise is largely derived from the intimate links between the Fed and the banking industry—and that it should be given a chance to put that expertise to better use.

It was Sen. Tim Johnson who first questioned Bernanke on the critical issue of Fed transparency, albeit from the standpoint of a senator who, like Dodd, went into the hearing already determined to support Bernanke's renomination. In response to Johnson's question about whether the Fed's monetary actions should be subject to an audit, Bernanke argued that already "we are in fact very transparent in our financial dealings," from disclosure of Fed minutes to GAO audits of non-monetary policy actions. But Bernanke argued that Congress could use its auditing power in the wake of an unpopular Fed decision to look at policy manuals, interview staff "and to basically second-guess the Fed's actions in very short order." That, he said, would undermine the Fed's independence and rattle financial markets.

A good follow-up question, sadly unasked, would have been, "What about rattled Main Street families, who see the sharp rise in the deficit that was driven in part by Fed policy decisions, and the trillions in off-budget liabilities that taxpayers are exposed to as a result of Fed commitments, and wonder if the government will be able to afford a whole range of responsibilities, from health care reform to defense spending? Don't they deserve to know how their tax dollars are being used to prop up the financial sector, and what, if anything, was demanded of the financial sector in return?"

Bunning said that "the AIG bailout alone is reason enough to send you back to Princeton," noting that Bernanke's actions made whole the insurance company's counterparties that were engaged in credit default swaps with AIG. "I can think of only two possible reasons why you would not make then-New York Fed President Geithner try to save the taxpayers some money by seriously negotiating or at least take up UBS (one of the countrparties) on their offer of a haircut. Sadley, these two reasons are incompetence or a desire to secretly funnel money to a few select firms, most notably Goldman Sachs, Merill Lynch and a handful of large European banks."

Either of those conclusions may be over the top, but the point is that we don't know. An independent audit would settle that question. It is essential that the Senate get past the bogeyman of compromised Fed independence that Bernanke has raised and insist that there is a process for getting these questions answered.

To push the Senate in that direction, sign the Progressive Change Campaign Committee petition thanking Sanders for "standing up to Wall Street and putting a 'hold' on Ben Bernanke."

Sanders Puts Hold on Bernanke Nomination

Robert Borosage — Wed, 02 Dec 2009 19:23:56 -0500

Senator Bernie Sanders has announced he will put a hold on the Bernanke nomination. Sanders wants the Finance Committee to hold serious hearings probing Bernanke's actions leading up to the financial collapse, and the emergency measures he took, committing literally trillions to bolster private financial institutions without a vote of Congress. Other Senators should be encouraged to join Sanders in demanding a full investigation before consideration of the Bernanke nomination.

***

http://www.nytimes.com/2009/12/03/business/03fed.html

Senator Moves to Hold Up Bernanke Confirmation
By EDMUND L. ANDREWS

WASHINGTON — Senator Bernard Sanders of Vermont said on Wednesday that he would try to block the Senate from confirming Ben S. Bernanke to a second term as chairman of the Federal Reserve.

The move is unlikely to derail Mr. Bernanke’s reappointment, but it could slow the confirmation process and give the Fed’s critics additional opportunity to press their case. As a practical matter, it means Senate Democratic leaders will have to line up 60 votes in favor of Mr. Bernanke rather than a simple majority at a time when the Federal Reserve is under increasing populist attacks from lawmakers on both the right and the left.

Mr. Bernanke will testify on Thursday at his confirmation hearing before the Senate banking committee. He is expected to face criticism for not doing more to prevent the financial crisis, and calls by some lawmakers for a sharply reduced regulatory role in the future.

Mr. Sanders, an independent, is not a member of the Senate banking committee, but he has frequently accused the Federal Reserve of bailing out Wall Street firms and the banking industry at the expense of ordinary citizens.

“In this country, there is profound disgust at what happened on Wall Street,” Mr. Sanders said in a telephone interview. “People want a new direction and people are asking, where was the Fed? How did the Fed allow this to happen, when one of their mandates to oversee the safety and soundness of the banking system?”

Mr. Sanders said he would place a hold on Mr. Bernanke’s nomination when it reached the Senate floor. Under Senate rules, lawmakers would need to amass 60 votes to override Mr. Sanders and proceed with a vote on the nomination.

Though the Senate has been paralyzed by similar blocking tactics on countless other issues, Mr. Bernanke probably has enough support in both parties to clear the 60-vote hurdle.

The Fed chairman was originally appointed by President George W. Bush and took over the central bank in February 2006. Despite his Republican ties, Mr. Bernanke forged a close working relationship with President Obama and his top economic advisers during the financial crisis.

Mr. Bernanke’s four-year term as Fed chairman ends on Jan. 31, 2010. If he were not reconfirmed by then, he could continue to serve in an acting role until he was confirmed or someone else was confirmed to succeed him. His supporters include much of the Senate’s Democratic leadership, though some senior Democrats have been more grudging than others.

Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the banking committee, has said Mr. Bernanke was “probably” the best person to lead the Fed because he responded valiantly to the financial crisis when it began two years ago.

But Mr. Dodd has also proposed stripping the Federal Reserve of virtually all its powers as a banking regulator, and consolidating all the federal government’s bank regulatory efforts in a new agency. In an Op-Ed article last Sunday in The Washington Post, Mr. Bernanke sharply criticized Mr. Dodd’s proposal.

Senator Richard C. Shelby of Alabama, the top Republican on the Senate banking committee, has also been sharply critical of the Federal Reserve but has not yet said how he will vote on Mr. Bernanke’s nomination.

Mr. Sanders, one of the Senate’s most left-leaning lawmakers, had already said he would vote against Mr. Bernanke’s appointment. He has also sponsored a bill that would allow Congress to “audit” all of the Federal Reserve’s activities, including its core mission of steering the economy by setting interest rates.

Mr. Sanders’s bill is identical to one championed by Representative Ron Paul, Republican of Texas, which Mr. Bernanke and other top Fed officials have adamantly opposed on the grounds that it would undermine the central bank’s political independence.

But in a surprising setback to the Fed, the House Financial Services Committee voted last month to approve Mr. Paul’s bill as an amendment to a broader bill aimed at overhauling financial regulation.

Before You Appoint Ben, Audit Ben

Robert Borosage — Wed, 02 Dec 2009 12:37:35 -0500

In the above video, Robert Borosage lists the questions senators must get answers from Ben Bernanke if he is to earn re-appointment to chair the Federal Reserve. Below is a related action campaign emailed to Campaign for America's Future supporters earlier today.

Tomorrow, the Federal Reserve Chair Ben Bernanke appears before the Senate Banking Committee which must vote on his nomination for a second four-year term.

Yet, Bernanke wants the Senate to rehire him as the taxpayers' banker without allowing the public to see what he's done with our money. That makes no sense.

Click here to tell your Senators: Before You Appoint Ben, Audit Ben.

As head of the Federal Reserve, Bernanke was blind to the dangers of the $8 trillion dollar housing bubble that led to the crash. The Senate Committee must probe why he made that mistake, and what he has learned from it.

But once the crisis hit, Bernanke took unprecedented actions. The Federal Reserve took on over $1 trillion in toxic bonds and other assets from banks. Trillions more were committed in guarantees and swaps to prop up failing Wall Street banks.

But with trillions committed to private companies, neither the public nor the Senate has any idea where the money went, what the terms were, who got what and why.

Clearly before Bernanke's nomination can be considered, the Senate should know what he did with the dough.

Click here to tell your Senators: Before You Appoint Ben, Audit Ben.

Letting Wall Street run wild is what allowed Main Street to get trampled. If we ever are to end the bubble economy, we must first end the secrecy.

The Senate must not approve Bernanke's re-appointment to the Fed without also approving transparency for the Fed.

Bernanke argues that auditing the Federal Reserve will constitute a "takeover of monetary policy" and undermine the strength of the dollar. But auditing does not strip the Fed of its monetary policy authority - nor is there any demand the Federal Reserve accelerate its release of its deliberations.

Deciding to raise interest rates, however, is a lot different than deciding to commit trillions to prop up private banks - without a vote of Congress and without accountability.

In a democracy, that simply can't remain secret. Bernanke acted in a dire emergency. Perhaps everything he did was necessary. But heroic or not, these actions cannot remain secret. They must be reviewed - and should be before the Senate even considers the Bernanke nomination.

Click here to tell your Senators: Before You Appoint Ben, Audit Ben.

Reckless behavior by Wall Street banks, aided and abetted by the Federal Reserve and the regulators who were asleep on the job, nearly pushed the global economy into the abyss. Then trillions were committed to private banks and insurance companies by the Federal Reserve to stave off the collapse.

Secrecy did not protect us from the crisis; secrecy will not prevent it from happening again. It is time to open the books.