Bulletin No. TK 7:04 pm Bridging the Partisan Divide Both men know the odds are stacked against success, given the pitched power struggles in Congress. Twelve of the panel’s 18 members are current lawmakers, six from each party, and both parties are fixated on the upcoming midterm elections. But Stern and Cote insist that they have a chance, and both have a history of political bridge-building. "What I keep saying to the progressive community is that when the crisis hits, it’s students, workers and poor people who pay the price," said Stern, who recently stepped down as president of the Service Employees International Union, the nation’s fastest-growing labor union. |
The New York Times’ David Leonhardt argues that The Federal Reserve was not conditioned to recognize the housing bubble, dismissing Fed Chairman Ben Bernanke’s recent claim that the Fed could have prevented the real estate crisis with greater regulatory power.
In an Atlanta speech to economists earlier this week, Bernanke called for stronger Fed powers to regulate, but took no responsibility for the Fed’s failure to notice the bubble. “This lack of self-criticism is feeding congressional hostility toward the Fed,” Leonhardt writes, which may prompt Congress to step away from expanding Fed powers and even oversee the Fed’s role in setting interest rates.
The latter idea, originally championed by Texas Rep. Ron Paul, is gaining traction and will soon come under Senate consideration. Some scholars support the interest rate takeover by Congress, blaming the Fed for feeding the housing boom by keeping interest rates too low for too long. But this prospect deeply alarms economists who say it would politicize monetary policy, "a first step toward runaway inflation."