The Washington Post's Binyamin Appelbaum and David Cho have taken a look back at the Fed's blithe response to signs of a looming crisis, and its failure to protect either banks or borrowers until it was too late. At the heart of any look at the Fed's response, of course, is the question: if the Fed and Bernanke screwed up badly with the financial crisis, can they be trusted not to do so again? Many economics writers point out that the Fed, imperfect as it is, is still the best safeguard against Wall Street blow-ups. A few, however, think we need automated regulation or better leaders to make the system work--Bernanke, they worry, lapsed too often for us to rest easy at night.

• The New Legislation Will Just Continue These Problems Mike Konczal thinks it's "amazing ... how much the current ideas behind the Frank bill codify the problems" the Post piece and other bloggers commenting on it identify.
  

• The Fed Screwed Up Big--But It's Still Our Best Bet "Two things are clear," writes Reuters's Felix Salmon: "the Fed had the power to prevent the excesses that banks got involved in over the course of the Great Moderation; and that it didn't even come close to beginning to wield that power until ... it was far too late." But he's not sure "anybody could do a better job than the Fed"--while banks will "probably ... continue to act with reckless impunity," we need to "at least try" to rein them in, "and the Fed's the only agency which has a chance in hell of succeeding." The New Republic's Noam Scheiber agrees, and tosses in a note about former chairman Alan Greenspan's culpability.
  

• Bernanke Was Even Stupider than This Piece Says, point out economist Paul Krugman and Mother Jones's Kevin Drum independently. Appelbaum and Cho chronicle Bernanke's skepticism regarding predictions of a housing crash, given that previous predictions--with regard to California, specifically--had proven wrong. Actually, say Krugman and Drum, a California housing bubble did burst ("painfully," adds Krugman) in the 1980s. "Nor was this an obscure bit of knowledge," says Krugman. "That's just willful blindness," writes Drum.

• Fed Too Fallible--Let's Automate The Washington Post's Ezra Klein thinks "it's all evidence that regulators can't be trusted and we need more automatic safeguards. The FDIC's insurance of bank deposits, for instance, prevents bank runs whether or not the FDIC thinks there's a problem in the market."

• No, Let's Just Appoint the Right People "One important thing we need to do," writes The American Prospect's Tim Fernholz, "is appoint people who aren't free market ideologues to these positions, and get more lawyers and fewer economists in the supervision departments. Appointments are half the battle in regulatory reform." Greenspan, for example, he says, "was his own self-fulfilling prophecy." Fernholz concedes the attraction of automating some regulation, though.
  

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