Crack the lid on the Fed

Compromise is the first step, but pressure must be kept on the Fed.

Federal Reserve Chairman Ben Bernanke offered a compromise to Congress. In exchange for disclosure of recipients of special relief programs and opening up the FedâÄôs operations and controls to limited oversight, the bank gets time to take stock and try improve its balance sheet, currently sitting at $2.29 trillion for the recent week âÄî more than double the level before the financial crisis struck. While compromise is typically the key to getting any real work done, BernankeâÄôs primary fear in releasing such information is stigmatizing companies that the Federal Reserve has saved through bailout recovery programs. My primary fear is that the companies we have bailed out should have been more thoroughly scrutinized. The Federal Reserve should be regulating banks, not bailing them out to save crisis in a competitive market where other banks could use new customers. Economic Darwinism is the only way to produce the best banking systems, and any bailout activities serve to slow the process. There are people and companies responsible for our current financial situation, and knowing who those people are is more important to the confidence of American and global investors than allowing more time for a cover up for bankers. It sounds conspiratorial, sure, but I think thereâÄôs a time for patience and a time for discipline. Wall Street bankers got a bailout when they may have needed an indictment, and itâÄôd be a shame if the guilty parties end up making off with banks failing in their wakes. The Fed has not completely failed in its mission, and thereâÄôs no reason to expect that it canâÄôt improve itself without excessive Congressional oversight. However, there is a long road of financial reform ahead when it comes to adequate disclosure and full transparency; the pressure should not be turned down in the light of small compromises. Those banks that needed bailout money needed it because they made some huge mistakes due to the lack of regulatory oversight. Someone must do something, and if the Fed doesn’t step up, Congress is obliged to. The practices and players that placed our nation into such turmoil must be identified accurately so that history doesnâÄôt repeat itself. Jon Radermacher welcomes comments at [email protected]