In a release to the press, Sen. Bernie Sanders announced that he had placed a “hold” on the nomination of Ben Bernanke for a second term as chairman of the Federal Reserve. Sanders’ action has drawn bi-partisan support. The press release from his office states:
“The American people overwhelmingly voted last year for a change in our national priorities to put the interests of ordinary people ahead of the greed of Wall Street and the wealthy few,” Sanders said. “What the American people did not bargain for was another four years for one of the key architects of the Bush economy.”
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.
“The American people want a new direction on Wall Street and at the Fed. They do not want as chairman someone who has been part of the problem and who has been responsible for many of the enormous difficulties that we are now experiencing,” Sanders said. “It’s time for a change at the Fed.”
The Federal Reserve has four main responsibilities: to conduct monetary policy in a way that leads to maximum employment and stable prices; to maintain the safety and soundness of financial institutions; to contain systemic risk in financial markets; and to protect consumers against deceptive and unfair financial products.
Since Bernanke took over as Fed chairman in 2006, unemployment has more than doubled and, today, 17.5 percent of the American workforce is either unemployed or underemployed.
Not since the Great Depression has the financial system been as unsafe, unsound, and unstable as it has been during Mr. Bernanke’s tenure. More than 120 banks have failed since he became chairman.
Under Bernanke’s watch, the value of risky derivatives held at our nation’s top commercial banks grew from $110 trillion to more than $290 trillion, 95 percent of which are concentrated in just five financial institutions.
Bernanke failed to prevent banks from issuing deceptive and unfair financial products to consumers. Under his leadership, mortgage lenders were allowed to issue predatory loans they knew consumers could not afford to repay. This risky practice was allowed to continue long after the FBI warned in 2004 of an “epidemic” in mortgage fraud.
After the financial crisis hit, Bernanke’s response was to provide trillions of dollars in virtually zero-interest loans and other taxpayer assistance to some of the largest financial institutions in the world. Adding insult to injury, Bernanke refused to tell the American people the names of the institutions that received this handout or the terms involved.
“Mr. Bernanke has failed at all four core responsibilities of the Federal Reserve,” Sanders concluded. “It’s time for him to go.”