Ground Control To Helicopter Ben

Dean Baker: We don't need a new systemic risk regulatory agency. We already have one, the Fed. The guy in charge of it? Fire his ass.

Firing Bernanke is not just a question of justice, although the millions of workers who have lost their jobs because of his mistake may see it that way. It is also an essential step in creating regulators who are actually held accountable for the quality of their work and therefore have a reason for taking their job responsibilities seriously.

As things work now, there is no risk for simply going with the flow. If you just repeat what everyone else is saying, and it turns out to be wrong, the Washington elite steps in for you with a supportive chorus of "who could have known?"

However, if a regulator were to step out line - imagine someone at another regulatory agency began to openly challenge Alan Greenspan and warn about the enormous danger created by an $8 trillion housing bubble - then they would be risking their future career path and their current job. It is an extremely rare public servant who will put their career path in jeopardy to promote the public good.

This is why none of the other regulators could see an $8 trillion housing bubble. They would have borne enormous career risk to make an issue out of the bubble after Alan Greenspan and Co. at the Fed had said that everything was fine.

It is not the responsibilities of the regulatory agencies that needs to be changed, but the incentives for the regulators. If the regulators face no sanction for just going along - even when they thereby get it horribly wrong - then they will always just go along.

In short, if we want regulators that actually police against systemic risk rather than ignore it, then we have to fire the regulators who failed horribly in the past. If we are serious about getting a real systemic risk regulator then Ben Bernanke must go.

Works for me. As long as we're holding people accountable, how about the guy that failed to see an $8 trillion problem and in fact made it much, much worse?