He may have saved America’s, nay, the world’s banking system but Federal Reserve boss Ben Bernanke is facing a Senatorial bid to claw back some of his powers.
Bernanke needs congressional approval for a second four-year term, and the televised hearings are a great platform for Senators with fiscal axes to grind: “We played a central role in efforts to quell the financial turmoil, for example, through our joint efforts with other agencies and foreign authorities to avert a collapse of the global banking system last fall, by insuring financial institutions adequate access to short-term funding when private funding sources dried up,” insisted Bernanke. Senators seem less worried about populist concerns bankers made off with vanfulls of taxpayer’s dollars than the lax regulations that led to the crisis, and the Fed’s increased influence over the private sector. The overall result could be a weaker Federal Reserve. Legislation is in the pipeline to strip the central bank of its regulatory powers, unify all bank oversight in one government organisation, and make monetary policy subject to a congressional watchdog, taking away the reserve’s political independence.