“Defending Bernanke…Defending Bernanke” - July 22, 2009

The Federal Reserve is back in the spotlight again this week. Chairman Bernanke testified yesterday on Capital Hill, and will do so again today.

While he has good news to share, this time, though, it’s as much about defending the Fed itself for its policies of the past year as it is about the economy…and the growing concerns over commercial real estate loans.

· Some feel the Fed went too far in bailing out companies and exposing taxpayers…and want to rein in its power and authority.

· Most, however, believe we should leave well enough alone…and not impede the Fed’s independence in conducting monetary policy…because fighting inflation, for example, involves unpopular decisions such as raising interest rates to slow economic growth – which hurts unemployment – not the stuff of which you want to mix with political agendas.

The Fed has done an outstanding job in the past year. What it did… in providing liquidity to the financial system at levels never seen before in history…averted an outright collapse in the global financial system. The Fed did what it had to do. The options were not pretty.

· Do we need more regulations to ensure umpires do their jobs better on the baseball field? NO!

· Do we need to regulate the Fed more with new rules to handcuff quick decisions in tough times? NO again!

If you think we really need to regulate the Fed for some simple overzealousness, think what we need to do to regulate Wall Street for its lack of character and integrity which led to much of this economic mess in the first place.