Anyone who remembers the FISA debate in 2008, and Chris Dodd’s efforts, knows that Senate holds only carry weight if Republicans make them (if you want to know what a hold is, go to the source of the master, Tom Coburn). That will be tested again when Harry Reid decides what to do with Bernie Sanders, the independent who caucuses with Democrats, and his plans to place a hold on Ben Bernanke’s confirmation.

Senator Bernard Sanders of Vermont said on Wednesday that he would try to block the Senate from confirming Ben S. Bernanke to a second term as chairman of the Federal Reserve.

The move is unlikely to derail Mr. Bernanke’s reappointment, but it could slow the confirmation process and give the Fed’s critics additional opportunity to press their case. As a practical matter, it means Senate Democratic leaders will have to line up 60 votes in favor of Mr. Bernanke rather than a simple majority at a time when the Federal Reserve is under increasing populist attacks from lawmakers on both the right and the left […]

“In this country, there is profound disgust at what happened on Wall Street,” Mr. Sanders said in an interview. “People want a new direction and people are asking, where was the Fed? How did the Fed allow this to happen, when one of their mandates is to oversee the safety and soundness of the banking system?”

Mr. Sanders said he would place a hold on Mr. Bernanke’s nomination when it reached the Senate floor. Under Senate rules, lawmakers would need 60 votes to override Mr. Sanders and proceed with a vote.

This would delay the confirmation, and with the Senate calendar completely stuck during the health care debate, it could delay it significantly, perhaps past the end of his term on January 31, 2010 (he would probably keep the position in an acting role until confirmation).

Sanders, in his statement on the hold, explained cogently why Bernanke did not deserve an additional term. In short, he’s done nothing to break up the worst practices of Wall Street, and done everything to keep the financial titans who nearly took down the US economy solvent and even prosperous – not giving “a red-hot damn about the American public,” in the words of Sheldon Whitehouse.

This is about as concise a bill of particulars as it gets:

The Federal Reserve has four main responsibilities: to conduct monetary policy in a way that leads to maximum employment and stable prices; to maintain the safety and soundness of financial institutions; to contain systemic risk in financial markets; and to protect consumers against deceptive and unfair financial products.

Since Bernanke took over as Fed chairman in 2006, unemployment has more than doubled and, today, 17.5 percent of the American workforce is either unemployed or underemployed.

Not since the Great Depression has the financial system been as unsafe, unsound, and unstable as it has been during Mr. Bernanke’s tenure. More than 120 banks have failed since he became chairman.

Under Bernanke’s watch, the value of risky derivatives held at our nation’s top commercial banks grew from $110 trillion to more than $290 trillion, 95 percent of which are concentrated in just five financial institutions.

Bernanke failed to prevent banks from issuing deceptive and unfair financial products to consumers. Under his leadership, mortgage lenders were allowed to issue predatory loans they knew consumers could not afford to repay. This risky practice was allowed to continue long after the FBI warned in 2004 of an “epidemic” in mortgage fraud.

After the financial crisis hit, Bernanke’s response was to provide trillions of dollars in virtually zero-interest loans and other taxpayer assistance to some of the largest financial institutions in the world. Adding insult to injury, Bernanke refused to tell the American people the names of the institutions that received this handout or the terms involved.

“Mr. Bernanke has failed at all four core responsibilities of the Federal Reserve,” Sanders concluded. “It’s time for him to go.”

Sanders’ staff released an additional set of quotes from Bernanke himself, which show him to have been wrong on the economy (calling it “robust” and “strong” in June 2006, for example), wrong about the housing bubble, wrong about the risk to the financial system and wrong about derivatives. Economist James Galbraith, contacted for this story, commented, “To quote Richard Nixon, to David Frost, ‘I have impeached myself.'”

In the meantime, an unprecedented coalition has come together to protest Bernanke’s confirmation until there is a full audit of the Federal Reserve, similar to the amendment that passed the House Financial Services Committee in the regulatory reform bill. The collection of names on this letter is striking: not just Bob Borosage and Jane Hamsher and Chris Bowers and Dean Baker and James Galbraith, but Grover Norquist, Phyllis Schlafly, Matt Kibbe of FreedomWorks and more. This is an unbelievable coalition that probably would break into a fight if they got in a room together.

Chris Bowers has put together a Bernanke confirmation whip count, and despite published reports that he has the votes for confirmation in the Banking Committee, Bowers thinks some of those yes votes may be soft.

The letter, along with all the co-signers, follows.

December 3, 2009

Dear Members of the U.S. Senate:

In the last two years, the Federal Reserve Board has lent several trillion dollars to banks and other private companies, financial and non-financial institutions through a series of special lending facilities. The total amount of loans made through facilities exceeds the annual budget of the United States. In addition, it guaranteed trillions of dollars of various assets and also made hundreds of billions of dollars available to several foreign central banks through currency swap arrangements.

At this point, neither the public nor members of Congress has any information about who benefited from these loans, guarantees, and swap arrangements. There is no information available on the specific terms of the loans – the interest rate charged, the collateral posted, and whether or not they were repaid. There is no information available on how it was decided who would qualify for the Fed’s help and who would be denied assistance.

Almost three quarters of the members of the House of Representatives have co-sponsored a bill calling for an audit of the Federal Reserve Board. This audit will allow Congress to assess how the Fed, under the leadership of its chairman Ben Bernanke, performed in this crisis and whether it acted appropriately in its disbursement of an enormous amount of money and guarantees.

Without this audit, Congress lacks the information it needs to evaluate Mr. Bernanke’s performance. Therefore the Senate should delay action on Mr. Bernanke’s reappointment until an audit of the Fed’s books takes place, the results are made available to the Congress and Mr. Bernanke answers a serious inquiry into the actions he took.


Ryan Alexander, president, Taxpayers for Common Sense
Chris Bowers, founder, OpenLeft
Dean Baker, co-director, Center for Economic and Policy Research
Robert Borosage, co-director, Campaign for America’s Future
Danielle Brian, executive director, Project On Government Oversight
Mark Calabria, director of financial regulation studies, Cato Institute
Mark Cohen, executive director, Government Accountability Project
Tom DeWeese, president, American Policy Center
Tyler Durden, founder, Zero Hedge
Sandra Fabry, executive director, Center for Fiscal Accountability
James Kenneth Galbraith, economist
Adam Green, co-founder, Progressive Change Campaign Committee
George Goehl, executive director, National People’s Action
Jane Hamsher, founder, FireDogLake
Gary Kalman, Washington director, Public Interest Research Group
Matt Kibbe, president, FreedomWorks
Grover Norquist, president, Americans for Tax Reform
Duane Parde, president, National Taxpayers Union
Aaron Swartz, co-founder, Progressive Change Campaign Committee
Phyllis Schlafly, president, Eagle Forum
John Tate, president, Campaign for Liberty
John Taylor, CEO, National Community Reinvestment Coalition
Stephanie Taylor, co-founder, Progressive Change Campaign Committee
Robert Weissman, president, Public Citizen
John Whitehead, president, The Rutherford Institute

David Dayen

David Dayen