"What disturbed me particularly about Bernanke's performance was the insistence on bailouts," said Schwartz in a flood of passion. "If he had been absolutely candid to the markets and explained on what basis he would choose to bail out firms, and which ones he would not consider as meriting bailout, I think if the market had understood that he had principles and they would be able to understand a decision in light of these principles, there would have been much less bewilderment about why did they rescue Bear Stearns and pass over Lehman Brothers. Even though he has made a lot of rhetorical statements about the importance of transparency, he has not been transparent. I think that's a real failure. I think the Fed or the government has no business bailing out a firm that is not solvent."
Monday, July 20, 2009
Here's a sharp statement by Anna Schwartz regarding Bernanke's actions as Fed Chairman (HT Mankiw):