Is It Time For A New Fed Chairman?

bernanke prayingYves Smith has taken up the battle to prevent the reappointment of Ben Bernanke as Fed chairman. While I agree in principal with her cause, I do think her rationale for denying him the post misses the mark.

When CEOs preside over disasters, they are fired. Captains go down with their ships.

And Bernanke needs to be replaced.

Well, actually, that’s not the way it works in America these days. CEOs, politicians, regulators and just about anyone else who had their fingerprints on the financial crisis have all pretty much been able to carry on with business as usual. No one went down with the ship, save for those few whose ships were allowed to go down. All the rest have been engaged in a well orchestrated dance that allowed them to cover for one and other in a such a manner as to preserve their sources of power and income.

John Carney at Business Insider opined a few months ago that the real cause of the partial destruction of the U.S. economy was nothing more than rank incompetence. Put simply, CEOs and their minions did an awful job of running their companies. It wasn’t some vast conspiracy to generate unbelievable amounts of credit in order to generate huge profits for their companies and themselves so much as it was a misguided belief that what they were up to made rational business sense.

If you subscribe to this view then everyone from Jamie Dimon to Ben Bernanke to Barney Frank and Chris Dodd need to go, along with thousands of their co-conspirators. Of course, that won’t happen as any breaking of ranks will only expose others in the chain. To deny Bernanke his reappointment would serve to cast a bad light on those who numbly cheered him on in the good times, and like a spurned lover, he could cause immeasurable harm to others if freed from the necessity to play along were he not reappointed.

So, yes, Bernanke needs to go but let’s not pretend it’s because that’s the way we deal with failure in this country.

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