The next big task facing these central bankers will be how to unwind the vast emergency measures that were put in place to fight the crisis. After the anxiety and tension that permeated their retreat one year ago the mood of relief and cautious confidence was almost palpable.

Housing news provided an additional lift, as the National Association of Realtors reported that sales of existing homes jumped 7.2 per cent in July. Bernanke did temper the mood by warning that the economic recovery was very likely to be slow and arduous, and that unemployment would remain high for another year. A growing number of economists and some Fed officials say that the shift to tighter monetary policies and higher interest rates will have to be much more abrupt than normal to prevent inflation in two or three years.

Mr. Bernanke did caution that strains persist in many financial markets across the globe, and he acknowledged that the banking system’s problems were far from over. This was echoed by Jean-Claude Trichet, president of the European Central Bank, who said “We still have a lot of work to do,” adding that “it would be a catastrophe if governments failed to heed the lessons of the crisis and financial regulation.”

There is a great deal of criticism of the proposed regulations by not only congressional members, but throughout the economic community. Among concerns voiced are that the current destitution of the American financial services industry will become permanent, that the moves will decrease America’s ability to compete globally, and, basically, too much weight is attached to populist objectives.

The Senators were particularly concerned that the Federal Reserve would gain too much power. For an in depth article please go to David Stout’s article in Thursday’s
New York Times.

During Mr. Geithner’s five year tenure as president of the New York Federal Reserve Bank his relationships with executives of Wall Street’s giant financial institutions became very close, which has resulted in much questioning of his actions which have favored the industry’s interests and desires.

Are Mr. Geithner’s critics right in saying that he has been motivated solely by a wish to help the financial industry, and is doing it at taxpayer expense? Did he miss too many signs, these last few years, that the financial system was falling apart?

You will be most enlightened by Mr. Becker and Ms. Morgenson’s most revealing and well researched background story in Monday’s Times.

The Republicans let Wall Street run wild with their policy of less or no financial regulation. With all of the money that passes through Wall Street, there needs be more Federal oversight. However, certain Democrats, like Barney Frank – a leading Congressional Democrats who heads Financial Committees – pushed Freddie Mac and Fannie May to provide loans to the poor. He continued to defend the mortgage companies even as of the late summer of 2008, asserting that these companies had a solid financial future going forward. Boy, was he wrong. You can bet that Fannie and Freddie contributed heavily to the Congressman’s campaign.

Below is a video of Barney Frank being interviewed by Fox newscaster Bill O’Reilly outing Barney Frank for telling the public on television in the summer of 08 that both Freddie Mac and Fannie May had solid financial futures. Watch and determine for yourselves.