Kevin Drum rounds up some of the recent Congressional follies that have surfaced during hearings with Tim Geithner and Ben Bernanke — Maxine Waters asking whether Geithner’s CEO (?) worked at Goldman Sachs and Michelle Bachmann forgetting how laws are made and then asking Geithner and Bernanke to renounce a global currency, a request that surely made them both die a little inside. And these are just the things that can be officially called stupid; there’s a whole other wealth of stupid Congressional pronouncements that the press treats as reasonable. It’s no wonder that Brad DeLong feels as he does:

[E]ach time a particular case comes along somehow I trust the Federal Reserve and the Treasury more than I trust Congress, and wish them untrammeled discretion.

Who wouldn’t? When even the quote unquote responsible legislators are passing ill-conceived bonus taxes and asking for a spending freeze in the midst of a deep recession? And of course, even if a good bill made it onto the Congressional agenda with majority support, that doesn’t mean it could make it through the Senate’s supermajoritarian gauntlet.

In times of crisis, we want to rely on experts, and we need them to be able to act quickly and forcefully. It should come as no surprise, then, that crises tend to result in increased power for government actors with limited checks on their authority. This often means the executive. During a financial crisis, it also means the Federal Reserve.

And so we have the rapid expansion in the scope and size of activities handled by the Fed. And when the president feels the need to put together a plan to shore up the banking system but doesn’t think he can get the resources he needs from the Congress, he sits down with the Federal Reserve and the Treasury and figures out how to wring a trillion dollar rescue out of the $100 billion in Congressionally approved funds he has left. Congress is dumb and slow, and so president Bush and president Obama have avoided them as much as possible.

Now because this is an economic crisis and not a political or national defense emergency, we tend not to see a lot of public hand wringing over this state of affairs. But it could be just as dangerous. And we’re continuing to centralize regulatory power, it seems. A new regulatory regime may well endow the Fed with the authority to keep an eye out for an systemic risk and excessive leverage. Calculated Risk quips that that won’t do much good if the regulator in charge doesn’t believe systemic risk is a problem (as Greenspan didn’t). I don’t think that’s true; if you make that job part of the Fed’s mandate, then only people who take that seriously will be appointed, just as only people who care about price stability are now appointed.

But even then, that doesn’t mean they’ll get things right. At various times in recent history, a very small group of people at the Federal Reserve have been responsible for very high levels of unemployment and have failed to prevent damaging bubbles. These economic outcomes have enormous impacts on the geopolitical state of the world. Lives hang in the balance. There are good reasons to want to depoliticize monetary policy; central bank independence is crucial to economic stability. But there are also good reasons to embrace checks and balances in a democratic system. As dumb and slow as the regular old political process may be, I think it’s necessary to keep most economic power in that system. Competent authority is seductive, but it’s also dangerous. We know that, and we need to take the bureaucratic good with the bad.