Bernanke's Capitol Hill Testimony

I listened yesterday as Fed Chairman Ben Bernanke re-applied for his job.

That's pretty much how I viewed his remarks. Others may, and will differ.

But as I worked on various items throughout the morning and afternoon, I kept hearing Bernanke solidly endorsing whatever new, half-baked financial rescue scheme is coming out of the administration.

My mind went back to Bernanke's testimony only last year, when Democrats were querying him on the need to cut spending. At the time, anxious to clip a Republican administration's wings and raise taxes, Congressional Democrats were nearly tripping over themselves to ask Bernanke to agree with them that deficits should be closed.

Now, in the wake of a $1T spending bill, Ben was silent on the matter. As were his Congressional inquisitors.

Instead, it was all about propping up famously-named US banks, rather than let them go through the natural process of insolvency, closure and seizure by the FDIC, and the next steps that all failed banks experience.

For example, where was Bernanke's defense of his own staff's bank examinations? Why defer to some new 'stress test' by Geithner's people, when the Fed was presumably stress testing and examining federally-chartered banks all along?

How could Geithner's purportedly "new" idea add anything that hasn't already been, or should have been done?

If anything, following in the footsteps of Volcker and Greenspan, Bernanke seems to cut a decidedly smaller, less confident and powerful figure. With a Congress controlled by the same party as the President who would renominate him in 2010, it's no surprise that Bernanke is appearing as eager and compliant as possible with anything the administration wants to do.

Nationalize a bank, but not call it that? Fine by Ben.
Spend a trillion dollars, but say you'll also cut the deficit? Totally believable, says Ben.
Keep interest rates low and demand more lending by already-crippled banks? Done, says Ben.

I suspect we are in for a very, very dangerous next few years, due to the recent, more acutely-politicized nature of Bernanke's position at the Fed.