Heckuva Job, Bernanke!

Is the Fed the new FEMA?

By Daniel Gross
Posted Thursday, Dec. 13, 2007, at 3:38 PM ET

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The Federal Reserve and the Federal Emergency Management Agency seem to have very little in common. One is a respected professional organization, led by highly credentialed economists, that is charged with promoting price stability and full employment. The Fed enjoyed a justly deserved reputation for responding well to man-made financial disasters in the 1990s. The other is an agency that had a reputation for responding well to natural disasters in the 1990s, but which devolved quickly into a Bush-era parking ground for third-tier political hacks. The former was led by the legendary Alan Greenspan, who bestrode the financial world of the 1990s like a colossus. The latter was led by Michael Brown, who would become legendary for bestriding the crisis-management world the way President George W. Bush rides a Segway.

And yet, in seeing how the two agencies have responded to the biggest challenge they have faced in recent years—the subprime mortgage debacle for the Fed, and Hurricane Katrina for FEMA—there seem to be certain commonalities. The analogies are admittedly imperfect, but the agencies' subprime response to the submerging of New Orleans and the subprime crisis encapsulate the way in which the Bush administration has failed to anticipate and prepare for significant problems and then to respond with alacrity and efficiency.