The Financial Sympathy Awards: Ben Bernanke

The Financial Sympathy Awards: Ben Bernanke

By Steve Thomsen

There are very few people in the world of high finance that I have respect for. Most are like Lloyd Blankfein, balding little twerps with a pathetic sense of self-entitlement. The Angelo Mozilos of the world all seem to have this attitude that anyone who talks about income inequality is directly blaming them, and therefore they should have no sympathy toward their detractors when they screw them over with junk financial products. It keeps them in an oddly removed state of mind where they’re never wrong and anyone who criticizes them is doing so for good old-fashioned character assassination. Except for Franklin Raines (this link contains a list of stories pertaining to his many many sins), who will say that you’re a racist for criticizing his work as Director of the Office of Management and Budget and his role in the Fannie Mae disaster.

Despite all of this, there is one man in the financial elite that doesn’t deserve the same heat as the rest of the goons on Wall Street. He’s been our Federal Reserve chainman since 2006 and has been called the worst names in the book. His partnering with Henry Paulson to pass the $700 billion TARP was truly controversial and his alliances in politics and finance have been widely condemned. Oh yeah, and he also was rumored to have bullied Bank of America in their merger with Meryl Lynch. But really, when it comes to Fed Chairman Ben Bernanke, we probably couldn’t have done much better than he did when it came to the financial crisis.

Ben Bernanke is a very bright man. He was a Harvard University undergrad, having been accepted with an SAT score of 1590 out of 1600 (and, strangely, he was very good friends with former Goldman Sachs CEO, Lloyd Blankfein.) From there, he attended the Massachusetts Institute of Technology for his doctorate of philosophy in economics. And from there, he was a Princeton professor and taught a class at George Washington University. After his teaching tenure, he went into government. He first sat at the governor’s board of the Federal Reserve in 2002. And then, in 2006, George Bush appointed him the chairman to follow Allan Greenspan.

It is perhaps because of the despicable cast of characters that surrounded Bernanke that I have a lot of sympathy for him. Compared to Greenspan, Bernanke was a saint. Bernanke was much more pragmatic in his dealings with the financial crisis, often making the moves that he did because it seemed the only way to handle such a horrible situation. This is in direct contract with someone like Franklin Raines, who was implicated in severe accounting fraud (and was still able to retire with his fortune intact.) And throughout the disaster, Bernanke was the only one who seemed nervous. Henry Paulson would blow up the world, then calmly present Congress with three pages of paper that were worth $700 billion total. When Bernanke gave his input, you could see him visibly shaking. My only assumption was that he was astonished by the God damn severity of the situation he found himself in.

Republicans and Libertarians are the most vocal in their hatred for Bernanke. They say he’s the Monopoly guy, printing fake money and telling everyone that it’s real. And they aren’t entirely wrong in that assessment. Bernanke has pumped a lot of paper money in the system to try and drive down interest rates. This has led to a level of inflation, but you’d be hard pressed to say it didn’t prevent a full-blown depression. As a matter of fact, many of the methods Bernanke used to try and avoid an even bigger crisis is straight out of the Great Depression playbook. His use of government bonds and low interest rates is truly strategic, like a good game of chess. And it must be the most nerve-racking job in the world. It’s no wonder he’s lost all his hair by this point.

The Ron Pauls of the world are convinced that Bernanke is Satan and his bailouts were “unconstitutional” (despite the fact that the founding fathers had no idea about the world of modern finance.) Many fiscal conservatives say AIG should have gone bankrupt. But that’s a narrow-minded view. The truth is, Bernanke’s actions to save AIG, while imperfect, were necessary to saving the whole financial world. Every depositor in America would have lost their savings if he had done things the conservative way. And while he shouldn’t have forced AIG to pay 100 cents on the dollar of what they owed to shady financial firms like Goldman Sachs, the takeover was an example of how we need government and big business to work together.

In 2009, TIME magazine named him the person of the year. And I have to say, I agree with them. He was the bold (although somewhat shaken) man who prevented the disaster. The people who hate him have to understand one thing: this was the man who sat at the table with the real villains of the story. He watched them all sit around the financial world’s self-destruct button and prayed to God that they wouldn’t push it. But when they did, he took on the bold task of cleaning up their mess. And that’s why, in a weird way, I have much respect for Mr. Bernanke. I’m very interested to see who will succeed him after his departure in 2014. But we can all agree on one thing: whoever succeeds him can’t possibly be as bad as Allan Greenspan.