I watched a bit of Janet Yellen presenting to the Senate Committee today. While most of it is rote, some of the politicians clearly have a political agenda in their questions. So I did pay attention when Ted Cruz asked his questions, as everyone says how smart he is.
He asked about Bernanke in his book admitting that in hindsight, the Fed hiking rates in September of 2008 was a mistake. He asked if Yellen felt the same way.
She was confused, and asked if he meant 2007, not 2008. He said, "no, 2008".
What a ding dong. If you get to ask the chair of the Federal Reserve just one or two questions and you are preening to look like a smart presidential candidate, then get your fricking date right!
Yellen, bless her heart, didn't know how to answer as that event didn't happen. She said she didn't remember that specific event and how she felt and would have to go back and look. Here is a comment from the WSJ (in Ted's camp, it seems to me):
TED TIME: This is the part of the hearing where we get our dose of presidential politics, courtesy of Sen. Ted Cruz (R., Texas). And it’s a special one.
Sen. Cruz, being a presidential candidate, is being super-dramatic by reading a critique of the Fed in 2008 similar to one he offered during a recent debate. But he seems to have some of his dates and facts off by a degree or two.
He cites Fed policy in the summer of 2008 and the Fed “shifting to a tighter monetary policy” that led to a scramble for cash and caused asset prices to collapse.
No surprise, all this drama without clear facts does not yield the desired response. Ms. Yellen is confused, of course, because the Fed started easing policy in the second half of 2007. In mid-2008, Ben Bernanke was fighting off hawks who wanted to tighten monetary policy. By the end of 2008, we ended up with rates pinned nearly at zero — where we’ve been for seven years.
Ms. Yellen notes much of this, saying “I think the Fed responded pretty promptly” in using monetary policy to deal with the crisis.
We have a feeling Sen. Cruz’s critique is going to be updated for the next time. We hope he keeps the drama, though. It’s a great touch for those of us who report on monetary policy and aren’t usually treated to a dramatic tone in these settings.