When I was writing Transparency Games, I noted how important the panicked look on Ben Bernanke’s face was to Hank Paulson getting $750 billion from the US Congress.

The entire sales pitch for what ultimately became the funds to bailout the Too Big to Fail banks was classic Wall Street BS.  Right down to the notion we were facing a second Great Depression.  Anyone with a nano-second of though would have recognized this wasn’t true.  After all, the Depression-era policymakers took steps to make sure this couldn’t happen again (for example, they put in place automatic stabilizer programs to protect the real economy from collapsing like it did during the Depression).

But what made the sales pitch believable and the idea we might possibly face a second Great Depression credible was Ben Bernanke.  He was the Chairman of the Federal Reserve and a self-annointed Great Depression scholar.  He was clearly panicked.  If he was this panicked, Congress concluded perhaps it really was a possibility.  Given the possibility, it was better to approve the funds.

Since the delivery of the sales pitch to Congress, I have wondered why Bernanke was so panicked.  After all, he should have known about the automatic stabilizer programs.  He should have known the banks were designed to protect the real economy and absorb the losses on the excess debt.  He should have known the combination of deposit insurance and the Fed’s lender of last resort capabilities meant even the most insolvent of banks could stay open indefinitely.

But there he was a man in full panic.

Laurence Ball, a Johns Hopkins economic professor, offered an insight into why Bernanke was in full panic.

Though the Treasury secretary had no legal authority over [the] Fed … Mr. Paulson’s forceful personality, as contrasted with the scholarly Mr. Bernanke, came into play. He was known as “the hammer” when he played tackle on Dartmouth’s football team. The hammer got his way.

You don’t get to be the head of Goldman Sachs without having the ability to sell a self-serving narrative.  Bernanke’s panic showed he fully bought into Paulson’s narrative.

Since retiring from the Fed, Bernanke has continued to defend Paulson’s narrative.  He seems completely unaware he is defending the indefensible (or he is so happy with the amount of money pouring into his checking account he is more than willing to keep offering up weaker and weaker defenses).