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Washington, DC - Rep. Barney Frank (D-MA), chairman of the House Committee on Financial Services today released the following statement on Chairman Bernanke:
“A recent article by Reuters quoted me very selectively, and consequently gave a very inaccurate view of my opinion of the job that Federal Reserve Chairman Ben Bernanke has done. I made a rookie mistake, about which I am embarrassed and which I believe it is important to correct. This is a very difficult time for our economy and unbalanced and unfair criticism of Mr. Bernanke is therefore not simply a matter of his feelings, but of potentially, even if inadvertently, undermining the confidence people must have in the public policy response to our current problems.
“In fact, I am on the whole favorably impressed with Chairman Bernanke’s role at the Fed, and as I told the reporter, I have been particularly pleased with his actions in the last few weeks. I thought his dramatic action with regard to a rate cut was a very good example of leadership that we needed at a difficult time, and his testimony before the House Budget Committee was an example of what I believe has been a very constructive role that he played in helping achieve a bipartisan consensus on a reasonable stimulus package.
“I have also been favorably impressed with his thoughtful commentary on the need to take measures that respond to the growth of securitization as a replacement for portfolio lending. I did tell the reporter that I thought Chairman Bernanke had considered inflation to be a graver danger than a slowdown in growth in the economy for longer than was appropriate. And there was one Open Market Committee meeting when I thought he should have moved for a drop in rates when he did not. I also disagree with the specifics of the Federal Reserve’s proposed rule to address subprime mortgages under HOEPA, but I did note that his acceptance of the need for action was a welcome contrast to the refusal of his predecessor to do anything at all.
“I also noted that while Chairman Bernanke has expressed a desire to make some changes with regard to the way in which the Federal Reserve focuses on inflation, he has consistently honored the dual mandate articulated in the Humphrey-Hawkins Act – mandating that the Fed be equally concerned about inflation and employment, and he has resisted pressure from some conservatives to relegate the employment objective to a much lower level than inflation.
“Most egregiously, on my part, I answered a stupid question. The reporter asked me if I thought that Chairman Bernanke would be replaced by a Democratic President in 2010. My answer should have been that it was silly to speculate about that because the factors that would go into a President’s decision to name a Fed Chairman more than two years from now remain largely unknown. Instead, I gave what I thought was a fairly trite answer pointing out that it is always possible that a President of one party might decide he preferred a different appointee than one he inherited from another party, but that was made as a general statement and not with any regard to the need, likelihood of, or desire to see Mr. Bernanke replaced. Since the article did not mention that I had given that answer in response to a leading question, it gave some the impression that I was already beginning to think about the need to replace Mr. Bernanke. That is entirely untrue.
“Being Chairman of a Congressional Committee has a number of advantages, especially from the standpoint of being able to affect public policies about which I care deeply but it does have the disadvantage that when I make a mistake, its impact can be magnified which leaves me with the responsibility to take whatever steps I can to correct my errors.”
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