That quote’s attributable to Casey Stengel, expressing his frustration
over his team’s spectacular ineptitude. Spectacular ineptitude is exactly the
phrase that defines Ben Bernanke’s chairmanship of the Federal Reserve throughout
the Fed’s stumbling, blundering support of special interests relating to the
2007 financial meltdown. When we meekly accept ‘quantitative easing’ as an
excuse to throw newly printed money at errant banks, to pay off their fraudulently
accrued gambling debts, its well past time to send old Casey out to the mound
to kick at the dirt, look toward the bullpen, tug his cap and wave in a new
pitcher.

One can imagine the pencil-chewing that went on, while the giveaway-artists
tried to invent a term to mask simply bailing out their own interests. “Paulson’s Troubled Assets Relief Program
(TARP) got too much push-back. We need a better name, one the public will
accept.”
Someone at the table finally came up with ‘quantitative easing’
and the show was on the road. Under that moniker, Bernanke shoved 22 times the
TARP funding at the banks, 16 trillion
dollars, and both the public and the press swallowed it whole. Consider some
history in these revelations exposed by Craig Torres in a Jan 18th,
2013 article in Bloomberg News titled Fed
Slow to Grasp Crisis in 2007 as Yellen Sounded Alarm.
(quotes from
Bloomberg italicized for attribution):
Federal Reserve officials in August 2007 saw the beginnings of the
crisis in subprime mortgages and concluded that the U.S. economy would be able
to withstand it, even as some Fed members warned that it could trigger a
downturn, transcripts from their 2007 meetings show.
“Well-capitalized banks and opportunistic investors will come in and
fill the gap, restoring credit flows to nonfinancial businesses and to the vast
majority of households that can service their debts,” Donald Kohn, then vice
chairman of the board, said in Aug. 2007 according to transcripts of the
Federal Open Market Committee meetings released today in Washington.
How’d that work out for you, Donald? At the time the statement was
issued, banks were flagrantly undercapitalized (read that quantitative disease,
if you wish) and Goldman Sachs was selling out its investors by privately
shorting the subprime mortgage derivatives it flogged. How could the Fed
possibly not know, short of blatant complicity or simply whistling past the
graveyard? Here are but three guys who were on board and might have had a
clue–The Big Picture, June 12, 2012, Macro
Perspective on the Capital Markets, Economy, Technology and Digital Media
(italicized
for attribution)
  • Stephen
    Friedman. In 2008, the New York Fed approved an application from Goldman Sachs
    to become a bank holding company giving it access to cheap Fed loans. During
    the same period, Friedman, who was chairman of the New York Fed at the time,
    sat on the Goldman Sachs board of directors and owned Goldman stock, something
    the Fed’s rules prohibited. He received a waiver in late 2008 that was not made
    public. After Friedman received the waiver, he continued to purchase stock in
    Goldman from November 2008 through January of 2009 unbeknownst to the Fed,
    according to the GAO. During the financial crisis, Goldman Sachs received $814
    billion in total financial assistance from the Fed.
       
  • Sanford Weill, the former CEO of Citigroup,
    served on the Fed’s Board of Directors in New York in 2006. During the
    financial crisis, Citigroup received over $2.5 trillion in total financial
    assistance from the Fed.
     
  • Richard
    Fuld, Jr, the former CEO of Lehman Brothers, served on the Fed’s Board of
    Directors in New York from 2006 to 2008. During the financial crisis, the Fed
    provided $183 billion in total financial assistance to Lehman before it
    collapsed.
$3.5 trillion divvied up
among just three companies, by insiders who worked for those companies before
sitting on the Fed Board. That’s a game-winning double-play. These guys knew
how to play Casey Stengel’s game, they just happened to be on the opposing team,
even though their public jerseys read Federal Reserve Bank. Back to Bloomberg:
At the next meeting, on June 27-28, Janet Yellen (San Francisco Fed
Chairman) said the biggest risk to economic growth was housing, which she
called the “600- pound gorilla in the room.” She cited the Sacramento area,
where price increases of more than 20 percent a year from 2002 to 2005 had
begun to decline. Sub-prime mortgage delinquency rates around the California
capital “rose sharply” in 2006 to become some of the nation’s highest, she
said.
“The risk for further significant deterioration in the housing market,
with house prices falling and mortgage delinquencies rising further, causes me
appreciable angst,” Yellen said. “Rising defaults in sub-prime could spread to
other sectors of the mortgage market and could trigger a vicious cycle in which
a further deceleration in house prices increases foreclosures.”
…The Financial Crisis Inquiry Commission’s 545-page report said
regulators took “little meaningful action” against the threats of financial
calamity.
“The prime example is the Federal Reserve’s pivotal failure to stem the
flow of toxic mortgages, which it could have done by setting prudential lending
standards,” the report says.
Fed officials were gathering information on mortgage markets. In May
2006, the Fed Board said it would hold public hearings on predatory lending and
sub-prime mortgage products. In July 2007, the Fed announced an unusual
agreement with the Office of Thrift Supervision and the Federal Trade
Commission to conduct targeted consumer protection compliance reviews of
non-bank subsidiaries operating as sub-prime lenders.
So they knew, or should have
known. But even board members at the Fed hear only what they want to hear, or
what serves their purposes. The Fed, after all, is run by banks to regulate
banks—foxes in charge of chicken-coops.
But, we do love our ‘commissions,’ who tell us which way the horse went
after the barn is finally locked. But is it locked, or has the Fed been too
busy stumbling around in the dark and greasing their own members’ wheels to
fasten the door? You might remember that Elizabeth Warren was actually doing something for consumer protection during
crisis time at the Fed, instead of reviewing
and the thanks she got was being sent home like a rookie by the United States
Congress. “Too toxic a personality for the banking community,” huffed the
Senators, glancing fondly in the direction of their campaign contributors.
So, being a doer rather than a reviewer, Elizabeth trotted home to Massachusetts
and ran for the U.S. Senate, sending incumbent Republican Scott Brown back to
the minor leagues. Casey Stengel would love her. She knows how to play the game,
stand up to the boys and rally the crowd in the 9th inning, when her
team is two runs behind.
If only we had a player like that at the Federal Reserve.