Wednesday, November 11, 2009

Barney Frank Stick Handles Ben Bernanke

NYT's Edmund Andrews has a curious piece out on Ben Bernanke and the Fed, which, I'm guessing was mostly supplied by Barney Frank. Since, Frank comes off as the hero in the piece. (Well, hero in the sense of power manipulator)Andrews writes:

...when [Bernanke] sat down shortly after 8 a.m. on Oct. 1 at the Rayburn House Office Building for coffee and muffins with Representative Barney Frank, the rumpled and wisecracking chairman of the House Financial Services Committee, he took in some blunt advice.

Voters had become suspicious and unnerved by the Fed because of its trillion-dollar efforts to bail out the financial system, Mr. Frank warned. If the Fed really wanted to survive the disgruntlement in both parties, he continued, Mr. Bernanke would have to step back and let him devise a compromise.

Reluctantly, the Fed chairman agreed to reduce his own visibility on the issue and let Mr. Frank take the lead...“Ben Bernanke turns out to have better political instincts than anybody thought,” Mr. Frank said in an interview last week. “They accept the fact that I know what I’m doing up here.”...As the summer wore on, even centrist lawmakers were getting impatient with Mr. Bernanke...By mid-July, Mr. Frank had begun to agree. Meeting privately with the Fed chairman that month, Mr. Frank warned that he might have to embrace a version of Mr. Paul’s bill. By September, he had begun exploring possible compromises.
Funny, when hearings on Ron Paul's bill were announced, there was no mention that Barney Frank has been stick handling Bernanke for months.

The public story continues to be that
Mr. Frank said he would “wall off” deliberations on basic monetary policy, and delay the release of information about the Fed’s financial operations to prevent traders from capitalizing on its moves
No mention of an audit of encumbered gold, gold swaps or any other transaction with foreign central banks. That appears to be walled off also, though not for public mention.

Andrews appears to get the sense there is something curious about what is being "walled off". He closes his piece with this:
Exactly what that means in practice remains unclear. Mr. Paul says he is delighted that his bill has gotten so far. But details matter, and Fed officials say they are quietly confident details will break their way.

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