How did the Fed and Fed Chairman Ben Bernanke perform in dealing with the financial crisis? According to a Washington Post review of the Fed's recent history, not so well. The story sparked wide debate over the Fed's role and whether we can really trust it to regulate. Lot of people happily took up the blame game. But Reuters blogger Felix Salmon, though providing a deeply comprehensive list of the Fed's errors and sins, argues that we still need it.

My feeling is that he's more right than wrong. Yes, the Fed screwed up big time over the course of the past couple of decades, essentially giving up most of its important regulatory oversight role. But at the same time it seems improbable, to say the least, that anybody else could do a better job than the Fed.

To put it another way, the Fed's our best hope here. Its chances of becoming an effective regulator might be slim, but they're higher than the chances of getting an effective regulator if you give the job to a different agency entirely. Either way, the most likely outcome is probably that banks will continue to act with reckless impunity. But we ought at least to try our best to stop them from doing that. And the Fed's the only agency which has a chance in hell of succeeding.

So many of the important debates on economics take place on a rarefied plane out of understanding to public discourse. Salmon habitually has the gift to make sense of arcane concepts, and today he put those skills to show. Instead of diving into the middle, he stepped back to lay out the systematic failings of the Fed point by point. Despite our distance from the early days of the crisis, it's important to reconstruct it in order to make a judgment on the future role of the Fed, and of Bernanke.

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