At his renomination hearing today, Fed Chief Ben Bernanke fielded a bevy of "pointed, sometimes angry" questions from esteemed senators looking for a whipping boy. He was blamed for causing the financial collapse, over-regulating, under-regulating and being a flat-out lap poodle for bank executives. And if that weren't enough, the nation's vitriol spilled out onto the blogosphere.
But if one were to nominate the day's most measured, well-fleshed out evisceration of Bernanke, the prize would go to The Wall Street Journal editorial board. While its conclusions tend to be colored by a conservative perspective, the assumptions are explained and bring new evidence of Bernanke's failings to light. First they give a qualified call for his departure:
The country needs a new Fed chief. We say this not because of Mr. Bernanke's performance during the financial panic of 2008, for which he has been widely and often deservedly praised. Like others in the regulatory cockpit at the time, he had to make difficult choices with imperfect information and when the markets were shooting with real bullets.
Bernanke's gravest misdeeds occurred earlier on, argues the Journal. They surface evidence about Bernanke's role in the country's monetary policy:
Thanks to the release of the Federal Open Market Committee transcripts from 2003. They show... that Mr. Bernanke was the intellectual architect of the decision to keep monetary policy exceptionally easy for far too long as the economy grew rapidly from 2003-2005. He imagined a "deflation" that never occurred, ignored the asset bubbles in commodities and housing, dismissed concerns about dollar weakness, and in the process stoked the credit mania that led to the financial panic.
Giving a recommendation for the road ahead, they conclude:
The better response is to hold policy makers accountable for their actions, including chairmen of the Federal Reserve. At this monetary moment more than any since the late 1970s, the Fed needs a hard-money chairman with the courage and credibility to resist the temptation to escape from the consequences of the last bubble by floating another one.