Wall Street Journal HIT & RUN on Dr. PaulSubmitted by soule on Tue, 07/21/2009 - 10:42
Bernanke Heads to Congress Battling Calls to Tame the Fed
WSJ.com | July 20, 2009
Federal Reserve Chairman Ben Bernanke helped steer the economy away from what he calls "Depression 2.0." Now he's trying to defend the Fed itself.
As Mr. Bernanke heads to Capitol Hill today for two days of testimony on the economy, the central bank is fending off attacks on many fronts from critics who want to rein in its power and autonomy.
Rallying one charge is Ron Paul, an iconoclastic Texas Republican who wants to abolish the central bank entirely. Mr. Paul's economic ideas sometimes make him the target of ridicule -- in the new film "Bruno," shock comedian Sacha Baron Cohen tries to seduce the startled congressman in a hidden-camera scene while discussing economic theory.
Federal Reserve Chairman Ben Bernanke will spend two days at Capitol Hill testifying on the economy.
Still, Mr. Paul has persuaded nearly two-thirds of the House to co-sponsor a bill requiring far-reaching congressional audits of the Fed. Audits would show "that it's the Fed that has caused all the mischief" in the U.S. economy, Mr. Paul says.
President Barack Obama has proposed giving the Fed some new powers to oversee financial institutions -- but he also wants to limit its authority to make emergency loans like the ones used to bail out American International Group Inc. and Bear Stearns. Meanwhile, the Fed is being pushed to rethink its structure amid concerns that bank-industry executives have too much influence in its actions.
Many Fed critics blame it for the economic crisis. They say it failed as a bank regulator and also fueled a bubble by keeping interest rates too low for years. They also feel Mr. Bernanke, who became chairman in 2006, stretched the Fed's powers too far by bailing out firms like AIG, pushing Bank of America to complete its Merrill Lynch takeover, and pumping hundreds of billions of dollars into the financial system.
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