Reshaping the Fed..........

Regardless of one’s opinion on Ben Bernanke, there is no denying the extraordinary impact he has had on the Federal Reserve since taking over as Chairman in 2006. A case can be made that the very nature and scope of the Fed has changed under Bernanke’s stewardship. Originally envisioned as a politically neutral institution meant to contain systemic risks and head off banking panics, the Federal Reserve has taken a considerably more “hands-on” role in the economy of late. It began in March 2008 with the fire sale of Bear Stearns to J.P. Morgan Chase – a maneuver largely engineered by Bernanke in conjunction with then-Treasury Secretary Hank Paulson. The Fed’s response to the recession continued with a $182 billion rescue of troubled financial services firm AIG, characterized by the Huffington Post as a, “…backdoor bailout” due to a lack of transparency about its execution. Wikipedia also reveals troubling testimony from Kentucky Senator Jim Bunning, who, “…said on CNBC that he had seen documents which show Bernanke overruled recommendations from his staff in bailing out AIG.” Even more significant than how AIG’s bailout was executed, however, is the pretext it created for future bailouts and government takeovers – including the TAARP program. Furthermore, the Fed’s initial responses to the recession were hardly the last of its politically consequential changes. By August, Bloomberg observed that Chairman Bernanke had, “…led the biggest expansion of the central bank’s power in its 95-year history.”..Link