A Democratic member of the House Financial Services Committee has apparently never heard of Ben Bernanke.
The startling revelation came during a hearing with the Federal Reserve’s Jerome Powell.
Rep. Rashida Tlaib (D-Mich.) was in the process of urging Powell to use its money-creation powers to bail out cities like Detroit, and Puerto Rico, when she came across the name Ben Bernanke, appearing to have never encountered it before, and unsure of how to pronounce it.
Powell informed Rep. Tlaib the Fed lacks the power to print money for cities and states.
“So I'm afraid that's simply not good enough,” Rep. Tlaib curtly told Powell. “I think your predecessors, former chairs Yellen, and I believe it’s Bernanake, seemed to agree based on remarks both gave last month. For instance, Chairman [Bernanke] has suggested a money finance fiscal program might be helpful during the next recession. Do you agree with that would be helpful?”
Powell responded, being sure to pronounce Bernanke’s name correctly, and informing the Michigan Democrat the former central banker had never endorsed such a proposal.
“I think that's really an untested and not widely supported perspective. I don’t believe Chair Bernanke said that a money supported fiscal policy would be something that we should do,” Powell said. “I know there's been a group of people that have pushed that idea, but I don’t think it included former Chairman Bernanke. You may see something I haven't seen.”
Here’s a transcript of the exchange:
TLAIB: “So when the feds step in to rescue banks in a crisis, is that because you believe their role in the economy is vital?”
POWELL: “Really, because we had no choice to prevent the financial system from collapsing in 2007 and 2008.”
TLAIB: “My city filing for bankruptcy was devastating to so many retirees, sir. 40, 50 years they worked for the city of Detroit, saw their pensions completely diminished, gone. Do you not believe that the governments of Detroit and Puerto Rico also play a vital role that should be preserved even if a financial crisis makes it hard for them to borrow money?”
POWELL: “What I believe is that it’s not a job for the Fed. The Fed has a particular role and particular authorities, and lending to state and local governments, and supporting them when they’re in bankruptcy is not part of our mandate.”
TLAIB: “We’re going to strongly disagree. I do believe you do have the authority. Now, you’ve mentioned that in the face of another financial crisis, you would use the same tools of expanding the balance sheet and purchasing long-term bonds, in other words, more of the same, correct?”
POWELL: “Yes.”
TLAIB: “So I’m afraid that’s simply not good enough. I think your predecessors, former chairs Yellen, and I believe it’s Bernanake, seemed to agree based on remarks both gave last month. For instance, Chairman [Bernanke] has suggested a money finance fiscal program might be helpful during the next recession. Do you agree with that would be helpful?
POWELL: “I think that’s really an untested and not widely supported perspective. I don’t believe Chair Bernanke said that a money supported fiscal policy would be something that we should do. I know there’s been a group of people that have pushed that idea, but I don’t think it included former chairman Bernanke. You may see something I haven’t seen.”
TLAIB: “I know. And Chairman, look, the federal government is supposed to be about people. I don’t see that we’re treating pensioners, a city like the city of Detroit which is front line communities that have really been hit hard by the financial recession. They keep saying Detroit’s coming back. If I show you neighborhoods, they’ll tell you, we don’t know what you’re talking about, because poverty’s actually increased, access to housing has decreased.”