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.
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
Arthur R. Thompson, CEO, The John Birch Society
Rob Weissman, president of Public Citizen
John Whitehead, president of The Rutherford Institute
December 15, 2009, 07:21 pm