Federal Reserve Chairman Ben Bernanke faced fresh questions from a House committee Thursday over the central bank’s role facilitating Bank of America’s purchase of Merrill Lynch. Martin Baily discusses the Federal Reserve’s future role with Jeffrey Brown on NewsHour.
JEFFREY BROWN: Today’s hearing just added to the many questions raised about the Fed and its future role. We talk about that now with Martin Baily, who served as chairman of the Council of Economic Advisers under President Clinton. He’s now at the Brookings Institution.
And Mark Calabria, who spent six years as a Republican staff member on the Senate Banking Committee, he’s now director of financial regulation studies at the Cato Institute.
Welcome to both of you.
Martin Baily, there was some tough questioning in that hearing we just heard. What does that tell you about any prospective future stronger role for the Fed?
MARTIN BAILY, Former Chair, Council of Economic Advisers: Well, the Fed is not popular on Capitol Hill; there’s no question about that. That was true before today, and I think after today that will be the case.
I have a lot of sympathy with Bernanke. I think he’s a man of integrity. I think he acted very decisively to try to help us get through this crisis, so that I think he’s getting a bit of a bad rap here.
But certainly it’s going to make it more difficult for the administration’s proposal, which is to give more power to the Fed. That’s going to be resisted.