September 20, 2018

Crisis and Consequences: The Policymakers Saved the Financial System. And America Never Forgave Them.

It was foreseeable, perhaps, that many on the left would view the Geithner-Paulson-Bernanke strategy as too friendly to Wall Street interests. It was also foreseeable that the libertarian right would loathe the bailouts. More surprising were the ways in which some of the biggest beneficiaries of the strategy became vocal opponents.

The Geithner strategy was based on rescuing Wall Street, using hundreds of billions of taxpayer dollars — while building a more rigorous regulatory system to try to prevent a similar crisis.

But by the time what became the Dodd-Frank Act was on its way to passage in 2010, the financial industry and nearly all Republicans in Congress had committed to all-out opposition of industry regulation. Only three of 178 Republican House members, for example, supported the bill.

Even as Mr. Bernanke’s easy money policies pushed the stock market upward and coincided with a gradually improving economy and low inflation, the drumbeat of commentary was overwhelmingly negative.

You could turn on a financial network at nearly any hour of the trading day and hear complaints about how quantitative easing and zero interest rates were distorting markets. When Mr. Bernanke left office in early 2014, when the stock market was soaring and the unemployment rate was falling fast, only 28 percent of Republicans approved of his performance, according to a Gallup survey.

Success has rarely been so unpopular.

How the crisis broke our politics

In July, Mr. Bernanke, Mr. Geithner and Mr. Paulson were together again. They invited a handful of reporters to interview them in a conference room at the Brookings Institution, where they will be participating in a crisis retrospective in September.

Might the rise of anti-establishment parties around the world — not least Donald J. Trump on the right and Bernie Sanders-esque socialists on the left in the United States — be traced to their work as crisis responders?

Article source: https://www.nytimes.com/2018/09/12/upshot/financial-crisis-recession-recovery.html?partner=rss&emc=rss

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