CBC’s Towns Leads Tense Questioning of Bernanke - Page 2 of 4

CBC’s Towns Leads Tense Questioning of Bernanke

Questioning of Bernanke was led by Rep. Edolophus Towns (D-N.Y.), right, chair of the committee.
What action will your committee recommend or take against Fed Chairman Bernanke if he is found to have abused his powers or used coercion?

I don’t know who’s lying, but I’m convinced there’s a lie being told. Once we finish with this, we can refer [the matter] to the Justice department, because after all, [the witnesses] testify under oath, and then the department can make a decision as to what they would do from that point on.

Bernanke’s term is up in January. Do you think he should be reappointed?

I want to talk to all the players, get a feeling in terms of their actions and then make a decision based on that as to whether he should be reappointed. But right now I have some concerns.

Do you believe that the Fed or Bernanke abused its powers in its role related to other aspects of the financial bailout in its dealing with either the Bush or Obama administrations?

I think that if the Fed indicated that [the Bank of America/Merrill deal] was a marriage that must take place that becomes a problem because these are private companies and the Fed should not be allowed to force them to merge with any entity. That’s what I’m troubled by. There are clearly some companies that are too big to fail but once we make a decision to bail them out, what do we do from this point on? We need to go to find out what we need to do to prevent these things from happening. I agree that some of these companies we could not allow to go under but what are we doing to correct that?

The Obama administration is proposing that the Fed’s powers should be expanded to oversee other financial institutions that may cause systemic risk? Do you agree with that?

I would prefer to reserve my views and feelings until we complete this investigation. We are now finding there are some other people we need to talk to based on information we’ve received up to this point. When we spoke to Ken Lewis, we got one story; when we talked to Bernanke, we got another story. And now we’re being told that Paulson is saying something altogether different. We need to get to the bottom of it before I can make a decision as to whether I would support the Fed having additional power. I’m concerned that there’s a whole lot of back scratching. I’m on your compensation board and you’re on mine. To me, that’s a mess, and until we can sort this out and come up with some definite guidelines, I’m not prepared to say they should have additional power.