Ben Bernanke: Economic Czar

Is anybody really in charge of this crisis? Barack Obama's off in California doing the "Tonight Show"-- "These financial industries are holding us hostage," the world's most powerful man complained to Jay Leno Thursday night -- and Treasury Secretary Timothy Geithner is under constant fire for his handling of AIG and just about everything else. So it occasionally feels as if there’s a bit of a power vacuum in Washington. But if there is, Federal Reserve Chairman Ben Bernanke is moving aggressively to fill it. Though his interest-rate toolbox is all but empty, Bernanke has managed to find yet new ways of acting with striking speed and force on his own in recent days. Bernanke is basically printing money on a large scale to fortify the financial sector, committing himself to buy $300 billion of Treasurys and committing an additional $750 billion to mortgage-backed securities. This latest effort has annoyed the Wall Street Journal editorial page. "The Bernanke Fed has now dropped even the pretense of independence and has made itself an agent of the Treasury, which means of politicians, " the Journal opined Friday .

In fact it’s much more likely that Bernanke, a scholar of the Depression who from the beginning has pledged never to let it happen again, is doing most of this on his own even though he generally coordinates his actions with the Treasury.

Bernanke is is also taking charge of the nation’s economic future on other fronts. While it was Geithner who announced the "stress tests" of major banks to be completed in April, the Fed is overseeing the process, bringing under its wing other regulators from the Office of Comptroller of the Currency, the FDIC, and the Office of Thrift Supervision. And, with Geithner’s Treasury badly understaffed, the Fed is dominating the discussion about future regulation. In testimony Thursday to the Senate Banking Committee, newly minted Fed Gov. Dan Tarullo (an Obama appointee, true enough) said the Board is undertaking a major effort "to evaluate regulatory and supervisory changes that could help reduce the incidence and severity of future financial crises." This includes the idea of creating a new "systemic risk regulator." While Tarullo acknowledged that Congress must legislate the new authorities, "effectively identifying and addressing systemic risks would seem to require some involvement of the Federal Reserve." Indeed. With Geithner wounded and Obama off on his latest road show, it looks right now as if Bernanke is minding the store.