In September of 2008 Federal Reserve Board Chairman Ben Bernanke ran to Congress telling them that if they did not immediately approve $700 billion for the TARP that the economy would completely collapse. According to the NYT, he told Congress yesterday that: "stripping the Fed of its powers would leave the financial system more vulnerable to collapse." The NYT should have pointed out how bizarre Mr. Bernanke's assertion is in the wake of his previous claims that, under his guidance as Fed chairman, the economy had been brought to the brink of total collapse. In effect, Bernanke is claiming that the economy would have performed even worse than having been brought to the brink of complete collapse with an alternative regulatory structure. It is worth noting that, while many acknowledge that the Fed's failures brought the economy to the brink of collapse, they credit Mr. Bernanke for preventing another Great Depression. The Fed has been successful in this respect, but every other country in the world (with the possible exceptions of Latvia and Iceland) has also managed to avoid another Great Depression, so Mr. Bernanke's skills in managing this crisis were apparently not uniqiue.
--Dean Baker
