Today, President Barack Obama nominated Ben Bernanke for another 4 years as the chairman of the Federal Reserve. In prepared remarks, Obama said Bernanke, "has led the Fed through one of the worst financial crises that this nation and this world have ever faced...As an expert on the causes of the Great Depression, I'm sure Ben never imagined that he would be part of a team responsible for preventing another...But because of his background, his temperament, his courage, and his creativity, that's exactly what he has helped to achieve."
To some extent, Obama is trying to take this issue off the table and out of the public discourse. He knows he's got a lot on his plate with his health care program in trouble and flagging poll numbers. This is a "layup" and I'm sure Rahm Emanuel advised him to get it settled.
However, the President appears to have not been following the Supreme Court. Yesterday, they ruled that under the Freedom of Information Act the Fed will have to release information and details about emergency lending to financial institutions within five days. Manhattan Chief U.S. District Judge Loretta Preska rejected the central bank’s argument that the records aren’t covered by the law because their disclosure would harm borrowers’ competitive positions, according to Bloomberg.
"The Fed has refused to name the borrowers, the amounts of loans or the assets put up as collateral under 11 programs, saying that doing so might set off a run by depositors and unsettle shareholders. “When an unprecedented amount of taxpayer dollars were lent to financial institutions in unprecedented ways and the Federal Reserve refused to make public any of the details of its extraordinary lending, Bloomberg News asked the court why U.S. citizens don’t have the right to know,” said Matthew Winkler, the editor-in-chief of Bloomberg News. “We’re gratified the court is defending the public’s right to know what is being done in the public interest.”
- White House: Economy in Worse Shape Than Expected
- Fed Losaes Suit Demanding Transparency
The public already believes that the financial community is incompetent due to the "Panic of 08" and the housing crisis. This new information has the potential to reignite public animosity towards the Federal Reserve, towards Ben Bernanke, and towards US Treasury Secretary Tim Geithner. Geithner, Bernanke, and Paulson were the key decision makers over which banks and financial institutions received TARP funds. You can bet you'll see a lot of conspiracy theories abound over who got what, when, and why. We'll find out more in five days when the Fed has to release this information.
More importantly, President Obama risks taking a serious hit to his legislative agenda should unemployment remain above 9.5% with no one to take the heat but himself.