Federal Reserve Chairman Ben Bernanke has done a remarkable job for Wall Street and President Obama has rewarded him. The question is, will Chairman Bernanke, given a vote of confidence from President Obama, focus on those who live from paycheck to paycheck and the small businesses that are the key to an effective economic recovery?
We met with former Fed Chairman Alan Greenspan on a number of occasions and were generally disappointed in his unwavering belief in the virtues of an unchecked and unregulated free market. We have also met with Chairman Bernanke on a few occasions and are unsure but hopeful that he will look after the interests of Main Street.
The real unemployment rate (including discouraged workers and the underemployed) is close to 20% nationwide, well over 20% in states like California and Michigan and above 30% for African-Americans and Latinos.
Before the Senate confirms Chairman Bernanke, we and many other Main Street constituents will be asking some tough questions relating to his perspective on unemployment, the foreclosure crisis, small businesses and the underbanked. Specifically, we will be urging Congress to secure Chairman Bernanke's position on seven key areas of concern.
- Will Bernanke allocate the more than $250 billion in unused Tarp funds to assist the true agents of job growth, small businesses and microbusinesses? For example, at least $100 billion in unused Tarp funds should be allocated, partly through the SBA, to address the credit problems of small businesses.
- The Community Reinvestment Act in the past has helped revitalize neighborhoods, enhance nonprofits and expand services to the unbanked and underbanked. Will Bernanke ensure that the Fed makes the expansion of CRA a high priority; and will compel new megabanks, such as Goldman Sachs and Morgan Stanley, to effectively and substantially embrace CRA? And will the chairman urge an expansion of CRA to any institution that benefits from subsidized or low-market-rate assistance from the Fed?
- Greenspan opposed transparency regarding beneficiaries of small-business loans and hid behind the antiquated Reg B. Rep. Barney Frank has called for full transparency for all small-business loans, including identification by race, ethnicity and gender. Will Bernanke vigorously support efforts at full transparency as minority businesses have urged since 1993?
- Will Bernanke support additional economic stimulus plans and credit policies by financial institutions designed to create long-term employment opportunities? Will the Fed treat job creation as seriously as it has treated propping up financial institutions that it claims are "too big to fail"?
- Up to 12 million Americans are facing foreclosures and thousands of neighborhoods that were once revitalized by CRA are again decaying. Will Bernanke break with Treasury Secretary Tim Geithner and demand mandatory and effective loan modifications and support, as part of an economic recovery Sen. Richard Durbin's bankruptcy reforms for loan modifications?
- Greenspan always opposed the type of diversity that President Obama promotes and is essential to bank safety and soundness and minority small-business development. For example, will the Fed support greater representation of minorities and women on boards of directors of financial institutions? And will it encourage financial institutions to award contracts to small businesses in the inner cities?
Bernanke is a keen scholar of the Great Depression. Will he follow FDR's approach of trickle-up financial incentives rather than former President Reagan's trickle-down incentives that have caused hundreds of thousands of small businesses to fail and the loss of almost 7 million jobs since the recession began?
We will be in Washington during the week of Sept. 13 for meetings with Bernanke, FDIC Chairman Sheila Bair and Comptroller of the Currency John Dugan. We will be asking each of them these questions. But most important, we will be posing these questions to various U.S. senators, as well as the leadership of the black and Hispanic congressional caucuses.