Fed Food

Was the grilling of the Fed chair a summer sizzler?

When Bernanke testified before Congress last week, a lot of people were surprised by the rancor. But this is a sensible approach to a newly political institution.
In the fabled days of yore, the Fed used “System RPs” and “Bill Passes” to manage the money supply and regulate the use of the discount window. On a good day, they could oversee a bank holding company exam.

But once the Fed gets involved in saving banks and creating investment vehicles, the central banker has become political in a major-league way. Arranging marriages and re-writing rules has major implications. Someone’s ox will be gored. Those are political decisions, and they requires political accountability.

Now seeing Barney Frank grill Ben Bernanke was distasteful, but I know no other approach. The Fed isn’t all-knowing. If Bernanke can’t handle that heat, he needs to get out of Washington’s kitchen.

Douglas R. Tengdin, CFA
Chief Investment Officer
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