Federal Reserve Chairman Ben Bernanke said Thursday the central bank was already moving forward with its new mandate to promote broad financial stability in the wake of financial oversight reform legislation that instructed it to do so.
The Fed “has restructured its internal operations to facilitate” a regulatory approach that looks beyond the health of individual financial institutions, to one that looks at the interlinkages between firms and the overall state of the banking system, the official said. [Emphasis added.]
Notice what the FRB
has to say on its “About” page:
The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded. [Emphasis added.]
I’m not sure how Bernanke managed to overlook this, what with him being the head of The Fed and all, but the whole purpose of having a central bank was, from day one, to promote financial stability. That has always been The Fed’s mandate. It’s like a default setting for the system, which is why it’s so surprising that Bernanke is just now catching on to this.
Bernanke’s reaction thus speaks to the general problem of bureaucrats. Namely, bureaucrats have a nasty tendency to shirk their duties, which always requires renewing their efforts at doing their job, accompanied with more power and money than before. The reason why bureaucrats fail at their job (micromanaging the economy) is not because they don’t possess enough knowledge and information, it’s because they don’t have enough resources at their disposal.
Thus, no bureaucrat ever admits that he is less than omniscient. He merely pledges to renew his effort, promising that he’ll get the job done right this time. Provided, of course, that he is given more money and power with which to do his job.