The ignorance of Congress on matters financial has been a well-trod meme this year, one that lawmakers are surely aware of. And so when Fed Chairman Ben Bernanke arrived on the Hill for his confirmation hearing today, he found himself sitting in front of lawmakers who had done their homework and were ready to show off their smarts. Senator Jim DeMint of South Carolina, for one, had clearly spent some time on Google, and at one point gleefully rattled off a number of the more embarrassing Bernanke quotes from 2007 ("the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained") and 2008 ("I don't anticipate any serious problems of that sort among the large, internationally active banks that make up a very substantial part of our banking system"). Senator Bob Corker laid into the Fed chairman about his oversight — or lack thereof — at Citigroup, which he called an "absolute disaster" and a "prime example" of an institution the Fed should've watched out for. And even Senate Banking Committee chair Chris Dodd, after expressing his support for the former Princeton professor, chastised him for the recent report from the TARP inspector general, which indicated he had been a wimp in not forcing big banks to take a haircut on AIG.
This, Bernanke, who spent much of the four-hour hearing apologizing, protested:
"Most of the firms were foreign. We had no authority over them," he says. When Dodd points out that Bernanke is chairman of the Federal Reserve, Bernanke responds: "I don't abuse my supervisory power."
"Apparently not in this case," Dodd says.
Of course, with the exception of Jim Bunning — the Kentucky senator who loathes the Fed in general and is seeking to block Bernanke's appointment breathed fire at the Fed chairman ("You are the definition of a moral hazard. I will do everything I can to stop your nomination and drag out this process as long as I can") — most of these guys will end up voting for Bernanke in the end, because overall he has done a good job and, well, let's face it, they'd probably rather have these talks with him than with Larry Summers. In the end, this was really just about putting him on notice, Meet the Parents–style. So now you know, Ben. They're. Watching. You.