The testimony before the House today showed a very collegial relationship between Bernanke and Paulson as they alternately answered questions and swatted down attacks. Their explanations stuck to the plan, specifically Paulson's Blueprint, as they repeatedly mentioned that Congress would need to reform financial regulation as well as grant new powers.
Most startling to our vision of a man who strikes thoughtful-yet-maniacal poses while dramatically lit, Bernanke declined control of any resolution regime. He said that the Treasury Department would be the most appropriate supervisor of a resolution regime because of the fiscal implications of a financial firm's collapse.
The bald pair used the questions to advance the agenda. Paulson said that some abuses wouldn't have existed if the US had a single regulator devoted to consumer and retail investor protection instead of the current multitude of regulatory bodies and their scattered remits.
Bernanke backstopped Paulson's position with supporting comments, saying that he would be happy to help reform efforts if the current Congress had the appetite for it. He advocated a single consolidated regulator for risk management and other operations within financial firms, reflecting that the information sharing between Fed and SEC was a stopgap that Congress should improve upon. Paulson said the same, mentioning that the Fed should gain that oversight.
Bernanke also stated his enthusiasm for covered bonds, saying that the FDIC was clarifying the rules on collateral that should enable their widespread acceptance. We expected the hearing to end with Ben leaning over and whispering, one bald man to another, "The beard's got your back."
--Senior Beard 'n Bald correspondent Andrew