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.