The Day Bernanke Played Rope-A-Dope

By: Charles Cooper
Topics: In The News

(AP Photo/Jose Luis Magana)

In Jean-Paul Sartre's No Exit, the characters are forever stuck in the same room - thus the origin of the phrase "Hell is other people." So ponder this one: If the French existentialist were still around and asked to rewrite the narrative - but this time featuring Ben Bernanke and his interlocutors on the Senate Banking Committee - would the work prove too brutal a read for a general audience?

I was kicking that one around after watching the Senate Banking Committee's circus of a hearing on Bernanke's nomination for a second term as Fed chairman. Remarkably, Bernanke kept his cool in the face of repeated provocations. But this never turned into great drama. The senators opposing his reappointment knew Bernanke would observe protocol. But if he did lash out, they would have the desired YouTube clip to circulate among the folks back in the home district.

Bernanke did neither. Instead of locking horns, he played rope-a-dope. Yes, Bernanke allowed, the Fed had "certainly" not done a "perfect job" at regulating excess. At the same time, he was able to make the case that the Fed had helped to return stability to the financial system. It was bland but it was effective.

Maybe the former MIT professor was able to keep his calm because he knew he also was the smartest person in the chamber. Bernanke also accepts his role as designated pinata, that his Fed chairmanship is destined to remain a thankless job until the day - whenever it arrives - that the economy again starts generating millions of new jobs.

In the meantime, he bears the brunt of populist anger. So it was that Jim Bunning (R-KY) told Bernanke that he was "the definition of moral hazard," adding that "from monetary policy to regulation, consumer protection, transparency, and independence, your time as Fed Chairman has been a failure."

In his questioning, Jim DeMint (R-S.C) played "gotcha" by playing some of Bernanke's wrong predictions back to him. It was an effective tactic, though I wonder what DeMint thought about the practice when Democrats were quoting "Mission Accomplished" back to George Bush?

DeMint later suggested that the nation's financial crisis was the fault of Fannie Mae and bad monetary policy. Nothing about the fallout of out-of-control securitization, not a word about the damage wreaked by the insane bets big financial institutions placed during the go-go days.

Again, Bernanke didn't take the bait (though he did correct DeMint, saying the Fed had flashed warnings about Fannie Mae and Freddie well in advance of the housing bust.)

A DeMint press release later claimed that "under Mr. Bernanke's leadership, the Fed has lent several trillion dollars to failing financial institutions that should have been held accountable by market forces." Translation: Lehman Brothers may have gone up in flames, but that was the free market's decision. If CitiGroup, AIG, Bank of America and the rest were unable to hold their own without a government bailout, the federal government had no role to prop them up.

But opinion about the Fed's intervention isn't another of those left-right litmus tests. For instance, the left-leaning Bernie Sanders wants Bernanke booted like a field goal from the 20 yard line. Meanwhile, Republican Judd Gregg took time to hail Bernanke for taking "extraordinary action," adding that otherwise "this country would be in a catastrophic financial situation."

In a year, perhaps, we'll know who was right. Until then, this debate will remain a flashpoint of disagreement. And, to be sure, a bit of a partisan sideshow as well.

Charles Cooper is an executive editor at CNET News. He has covered technology and business for more than 25 years, working at CBSNews.com, the Associated Press, Computer & Software News, Computer Shopper, PC Week, and ZDNet. E-mail Charlie.

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by noloyalisti December 4, 2009 2:28 PM EST: Capitalism has become a sick disease for this country. Just like an extremist religion, we are bowing down to the will of big corporations that exist for only one thing, profits. Keeping them strong is anti-democratic and is turning us into a 3rd world country. That is why we need to get rid of the virus: people like Bernanke.; Reply to this comment


by icjunior97 December 4, 2009 10:58 AM EST: I think that the process needs to be looked into. Dont tell me for a second that these bankers didnt get excatly what they wanted. We a complete audit of the Feds, let really see what is going on behind close doors.; Reply to this comment

by burneb December 3, 2009 10:53 PM EST

If Warren Buffett thinks Bernanke has been doing a pretty good job under very difficult and thankless circumstances, that means a lot more to me than cheap shots from Congressmen.

Many of the most critical grandstanders in Congress are the same trolls who undermined and weakened the regulations that should have prevented the current financial crisis.

Any gaps between Bernanke's predictions and actual outcomes are quite tiny compared to the glaring boners and bogus claims of DeMint's public bloviations.

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by democracy1 December 3, 2009 11:03 PM EST: Yeah, I'll take Buffett's assessment over that of these clowns any day!


by thesevenveils December 4, 2009 12:12 AM EST: Buffet has made hundreds of millions of Bernanke's mistakes. No wonder he likes him.

Even a clown knows when someone hasn't done there job and screwed their pooch too.


by noloyalisti December 3, 2009 9:57 PM EST: Bernanke pretty much took us off the financial cliff along with the Bush Crime Family. The disaster that was Reagan and his privatization schemes allowed the big corporations to outsource and offshore all of what really makes wealth and that is manufacturing. Now big corporations own and run EVERYTHING including our government for profit.; Reply to this comment

by ToolMangler1 December 3, 2009 9:54 PM EST

Ben Bernanke just boosted his standing in my eyes. Anybody that can take what I watched him take and not lose it, is a very cool customer and able to handle anything. He is the exact type person to be in charge of the Nations money.
Kudos, Ben

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by noloyalisti December 3, 2009 9:56 PM EST: This guy is the cause of our financial disaster and the vast implementation of corporate takeover of the country. People like this is what will be the downfall of Obama. More of the McSame old corporate rape and pillage.


by jeannettelj December 3, 2009 9:00 PM EST: We love you, Ben. You have kept your head when all around were losing theirs. The Republican's and the last administration caused most of the problems that we now face, which Jim Bunning conveniently seems to forget. That's right. Blame the current administration for everything. They inherited an economy that was on the edge of a cliff and have been trying to pull it back. But no matter what they are dam** if they do and dam** if they don't.; Reply to this comment


by democracy1 December 3, 2009 8:32 PM EST: That Jim Bunning of KY had the nerve to criticize ANYONE for being lax on "regulation, consumer protection, transparency, and independence" after being silent on the lack of the same over the past 8 years is the height of hypocrisy.

He was happy to be silent about the lack of those issues under the previous administration. So why does he pretend to be championing those issues now? Ridiculous!

Republican Judd Gregg seems to have a reasonable nonpartisan perspective, however. Kudos to him.; Reply to this comment


by rightbehind December 3, 2009 8:23 PM EST: Ben Bernanke is smarter than jim bunning ever thought about being. Looking forward to a democrat taking that seat.; Reply to this comment

by RegVoter December 3, 2009 7:27 PM EST

More ignorant and rude behavior from some in Congress. When did their right to ask questions of the Executive Branch expand to making rude remarks to those being questioned?

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