Sen. Jeff Merkley of Oregon today became the first Senate Democrat to announce a vote against Federal Reserve Chairman Ben Bernanke’s nomination for a second term. He talked with us about his decision ahead of Thursday’s Senate Banking Committee vote on confirmation:
Bernanke is President Obama’s nominee for Fed chairman. Why are you voting against him?
It really goes back to Dr. Bernanke’s involvement over the course of the development of the economic bubble and really in his roles with the Council of Economic Advisers and his role as a member of the Fed board and then as chair. He was very supportive while many things were unfolding that paved the way to this economic collapse. Essentially that was a philosophy that looked to the health of Wall Street as a key to a successful economy rather than looking to the health of the American family finances.
Don’t you think Congress and many other policymakers also deserve some blame for what led to this, rather than putting it on Bernanke’s shoulders?
I don’t think in anything I’ve said or written, that I would give him all the responsibility. But I think it’s important to keep in mind that it was during the time that he was serving in these capacities, that derivatives had an exponential growth, that the practice of kickbacks to mortgage brokers to pay them to trap people into subprime loans developed. It was during this period proprietary trading expanded significantly. It was during this period that the securitization and the resecuritization of mortgage packages that involved loans that had not been documented and were not found proceeded to basically create a profound weakness in financial institutions throughout the world. It was in this period that the leverage ratios were lifted on the five largest banks in America. All of these things were factors that essentially Bernanke was either supportive of or failed to advocate and express concerns about. He really had a front-row seat on the factors that led to this bubble. There’s plenty of responsibility to be allocated elsewhere, but other parties are not being nominated. This is Bernanke’s nomination.