Geithner Gets Tongue Lashing

By Lisa Valentine

Overheard at a U.S. Joint Economic Committee meeting:

U.S. Congressional Representative Kevin Brady to U.S. Treasury Secretary Tim Geithner: “Conservatives agree that as point person, you failed. Liberals are growing in that consensus as well. For the sake of our jobs, will you step down from your post?”

Geithner: “What I can’t take responsibility is for the legacy of crises you’ve bequeathed this country.”

U.S. Congressional Representative Michael Burgess to Geithner: “I don’t think you should be fired. I thought you should have never been hired.”

Ouch.

If Geithner is in the hot seat, things aren’t looking much better for Federal Reserve Chairman Ben Bernanke. U.S. Congressional Rep Ron Paul had introduced a bill in the summer (see related blogs on July 13 and July 15) that would limit the Fed’s power and require the central bank to disclose more information about its inner workings to the congressional Government Accountability Office (GAO). Bernanke retorted that the bill would ruin the Fed’s ability to set monetary policy not beholden to politicians.

At the time Paul announced the bill, we reported that it had little chance of passing.

We were wrong. The bill is gaining momentum in both the House and the Senate. Anger and frustration against Wall Street and banks are apparently pushing passage of the bill. The Senate Banking Committee is also looking at a bill that will strip the Fed of its bank supervision powers.

It’s no wonder that U.S. elected officials are putting severe pressure on the Fed. According to a July 2009 Gallup Poll, only 30% of Americans believe that the Federal Reserve is doing a good or excellent job and 22% believe the Fed is doing a poor job.  Now, 30% may not seem too low, except when you compare it to the 40% that say that the Internal Revenue Service (IRS) is doing a good or excellent job. You know the Fed has a public relations crisis at hand when it scores lower than the IRS.

In September 2003, 53% of Americans thought the Fed was doing a good or excellent job and only 5% thought it was doing a lousy job.

With the Thanksgiving recess upon us in the U.S., very little will be happening this week in the House and Senate. We wouldn’t expect any action on either bill until after the first of the year.