Ben Bernanke and Lessons from the Great Depression

I realize that there are many of you out there that are enraged that the Fed is not disclosing who is borrowing from the TARP program, how much or what the goverment is paying for the assets. And you have a right to be mad. But let me also remind you of a little story from the Great Depression. The Reconstruction Finance Corporation (RFC) was a government agency that was in the bailout business back in the early 1930s. When they first started their deliberations, the names of the banks that borrowed from the RFC were not published. But beginning in August 1932, any bank that borrowed from the RFC had its name published and all the particulars were splashed across the media. Once this happened, borrowing from the RFC dried up as banks were reluctant to borrow as it was a sign of weakness. It snowballed until the ultimate crisis happened...first in the banking collapse in Michigan in February 1932 and then in the ultimate meltdown in March 1933. Like banks that have to go to the secondary discount lending facility today, you show up there and you might as well have a sign that says "soon to fail" hung around your neck. I suspect Ben Bernanke remembers these lessons from the Great Depression. He deserves the benefit of the doubt to do it this way. By the way, I have a one hour interview with Chairman Bernanke in my second book on the Great Depression seen in the upper right. You could call Edward Elgar at 413-584-5551 and order the book. Imagine that.

Here is a very good presentation of the issues involved in this matter (thanks again to W. Douglas McMillin)

http://www.funnyeconomist.com/Transparency.pdf