I spent a good part of today driving from New York to Philadelphia and back. It was a fantastic opportunity to listen to Ben Bernanke being grilled by the United States Senate and struggling to defend his record as Chairman of the Federal Reserve during a period that has been likened to the Great Depression. The very best part was a blistering attack on Bernanke by Senator Jim Bunning, a man who is definitely not afraid to tell it like it is. Respect Mr. Bunning! Felix Salmon obviously enjoyed it too, writing on his Reuters blog:
I wonder what it was like to be Ben Bernanke today, on the receiving end of an absolute lashing from Senator Jim Bunning. Here’s a taster:
Chairman Greenspan’s attitude toward regulating banks was much like his attitude toward consumer protection. Instead of close supervision of the biggest and most dangerous banks, he ignored the growing balance sheets and increasing risk. You did no better. In fact, under your watch every one of the major banks failed or would have failed if you did not bail them out.
Bunning then quoted Bernanke’s own words from his own confirmation hearing, when he said that “no bank is too big to fail”. No, Bunning wasn’t laughing either:
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.
This is the sort of parliamentary rhetoric which we Brits are quite used to, but which is electrifying in the normally-staid confines of the US Senate. Good for Bunning for taking the gloves off.