Bloomberg’s Caroline Baum picks up on Bunning
Senator Jim Bunning’s classic line, “when I picked up my newspaper yesterday, I thought I woke up in France,” was delivered before the Senate Banking Committee as Ben Bernanke, the Fed Chair, gave testimony. He was rightfully upset that Hank Paulson and Ben Bernanke wanted to give the Treasury a blank check to go out and do whatever it likes to prop up the too-big-to-fail institutions Freddie Mac and Fannie Mae.
He has a point. The Banking Committee was gathered to hear testimony from Federal Reserve Chairman Ben Bernanke on the state of the economy (not good) and, immediately following, more testimony from Bernanke, Treasury Secretary Hank Paulson and Securities and Exchange Committee Chairman Chris Cox on the latest developments in financial markets (also not good) and regulators’ latest initiatives to make them better.
Cox told the committee he was launching a jihad against rumor-mongers and short-sellers. The SEC subpoenaed internal communications from Wall Street firms and hedge funds to determine if there was any hanky-panky going on in connection with the dive in the share prices of Bear Stearns Cos. earlier this year and Lehman Brothers Holdings Inc.
The securities industry regulator introduced new requirements for anyone looking to sell short the stock of 19 financial companies. The new measures will expire in 30 days if not extended. (Everyone who thinks they won’t be extended, raise your hand. Good. We can move on.)
The red shading is mine. Because it highlights the creeping anti-free market bent of the Feds. And this includes the SEC, The Treasury, the Federal Reserve and Congree in their attempts to stop the credit unwind process from hurting Americans (or their Wall Street and foreign government friends). The U.S. has clearly turned away from its free-market bent.
The U.S. is supposed to be a beacon of capitalism for the rest of the world. Our leaders preach the merits of free markets to developing countries looking to emerge from poverty. They look askance when foreign monetary authorities, such as Hong Kong and Taiwan, intervene to support their domestic equity markets. Government ownership of private companies, Asian “crony capitalism” and European-style corporatism, with business and state interests aligned, are frowned upon.
But, people, we really need to be asking ourselves what the role of government here is. It is not to let the markets act entirely unfettered by regulation as they have during the Bush administration and under the auspices of the Alan Greenspan Fed. This free market orthodoxy was always destined to fail. There is a clear regulatory role for government in all of this. However, as the pendulum has clearly started to swing the other way, Bunning and Baum recognize this is not it.
Jim Bunning’s Capitalism Pitch Is in Strike Zone: Caroline Baum – Bloomberg, 18 Jul 2008
Senator Bunning blasts Bernanke at Senate hearing