We’re not talking about a long-gone obscure figure here. He was chairman of the Federal Reserve until 2014.
You’d think that Congresswoman Rashida Tlaib(D-MI) who sits on the Financial Services Committee would know the name Ben Bernanke. After all, he was the man who used some controversial measures in the wake of the ’07-’08 financial crisis.
The man’s name was everywhere with both cheers and jeers.
Bernanke is now at the Brookings Institute and has written several books on both micro- and macroeconomics, as well as two books about the financial crisis when he was Federal Reserve Chair.
Bernanke, the Fed chief from 2006 until 2014, is now a distinguished fellow at the Brookings Institution in Washington. He singled out the panic that engulfed the financial system with the 2008 collapse of Lehman Brothers Holdings Inc. as the key reason for the depth of the recession back then…
…Bernanke took issue with economists who contend that the housing-price bust — and its impact on household wealth and consumer spending — was the main driver of the deep downturn a decade ago. While that undoubtedly played a major role, particularly in sparking the crisis, Bernanke said the recession wouldn’t have been nearly as bad as it was if investors hadn’t yanked money out of banks and other financial institutions.
“There was a run, a panic analogous to the 1930s, but in an electronic form rather than people lining up in the street,” he said in the video. “The availability of credit plummeted.”
Yet, Tlaib doesn’t seem to know who Bernanke is. The shocking moment came during a Financial Services Committee hearing with the current Federal Reserve Chair, Jerome Powell. Tlaib was urging Powell to bail out Detroit and Puerto Rico when she came across the name “Bernanke” in her notes and had no idea how to pronounce it.
It was rather embarrassing.
TLAIB: So when the feds step in to rescue banks in a crisis, is that because you believe their role in the economy is vital?
POWELL: Really, because we had no choice to prevent the financial system from collapsing in 2007 and 2008.
TLAIB: My city filing for bankruptcy was devastating to so many retirees, sir. 40, 50 years they worked for the city of Detroit, saw their pensions completely diminished, gone. Do you not believe that the governments of Detroit and Puerto Rico also play a vital role that should be preserved even if a financial crisis makes it hard for them to borrow money?
POWELL: “What I believe is that it’s not a job for the Fed. The Fed has a particular role and particular authorities, and lending to state and local governments, and supporting them when they’re in bankruptcy is not part of our mandate.”
TLAIB: We’re going to strongly disagree. I do believe you do have the authority. Now, you’ve mentioned that in the face of another financial crisis, you would use the same tools of expanding the balance sheet and purchasing long-term bonds, in other words, more of the same, correct?
TLAIB: So I’m afraid that’s simply not good enough. I think your predecessors, former chairs Yellen, and I believe it’s Bernanake, seemed to agree based on remarks both gave last month. For instance, Chairman [Bernanke] has suggested a money finance fiscal program might be helpful during the next recession. Do you agree with that would be helpful?
POWELL: I think that’s really an untested and not widely supported perspective. I don’t believe Chair Bernanke said that a money supported fiscal policy would be something that we should do. I know there’s been a group of people that have pushed that idea, but I don’t think it included former chairman Bernanke. You may see something I haven’t seen.
TLAIB: I know. And Chairman, look, the federal government is supposed to be about people. I don’t see that we’re treating pensioners, a city like the city of Detroit which is front line communities that have really been hit hard by the financial recession. They keep saying Detroit’s coming back. If I show you neighborhoods, they’ll tell you, we don’t know what you’re talking about, because poverty’s actually increased, access to housing has decreased.
Watch the awkward moment:
— Tom Elliott (@tomselliott) February 11, 2020
That moment where Chairman Powell correctly uses the name “Bernanke” in a sentence to gently correct her is just… awkward.
Also interesting was Rep. Tlaib telling Jerome Powell the Federal Reserve should bail out cities like Detroit, and also Puerto Rico pic.twitter.com/cgJJbN6knZ
— Tom Elliott (@tomselliott) February 11, 2020
You’d think that there should be a basic understanding of something as huge as the financial crisis and the decisions made by the Federal Reserve Chair by every member of the Financial Services Committee.
The thing with Tliab is, she wears her ignorance on her sleeve.
But the big question here is, how many others are there on the House Financial Services Committee are just as ignorant and don’t make headlines?