Ben Bernanke endured quite a bit of criticism during his term as Chairman of the Federal Reserve. A few of his more severe critics called him power hungry or even a megalomaniac because of his arrogant, verging on autocratic attitude about his important role in the global financial system, but Bernanke’s retirement to a quiet life of wealth and luxury after leaving the Fed seemed to belie that claim. Until Monday, that is, when his elitist, big government leanings burst out into the open during a panel discussion hosted by the Hutchins Center on Fiscal and Monetary Policy.
Bernanke calls for “economic emergency” presidential power
During the discussion, Bernanke called for the president to have the power to declare an “economic emergency” much like he has the power to declare war. He justified his plan by saying it economic crises were “chaotic”, and would be a good idea to give “the president some ability to declare emergencies or take extraordinary actions and not put that all on the Fed.” He went on to say: “The constitution gives the president significant flexibility to respond to military situations,” in part because they are chaotic.
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After stirring up the waters, Bernanke backed up a bit, saying: “I am sure it is not politically possible, but it would be worth thinking about.”
Fed moved outside traditional purview during the financial crisis
When the financial crisis was unfolding back in the fall of 2008, the White House requested Congress for authority to purchase troubled assets from financial institutions.
The House first rejected the idea, then reconsidered and what eventually became the $700 billion Troubled Asset Relief Program was signed into law.
Of note, during this time, the Fed established a number of emergency loan measures to protect the economy and prevent a complete credit freeze up. A number of economists and analysts have commented that these emergency loan programs were fiscal policy that had typically not been considered in the Fed’s purview.