Given that the multifront economic crisis triggered by the subprime mortgage market meltdown threatens to buffet Americans for years to come, Federal Reserve Chairman Ben Bernanke's new proposal to have a “macro” government regulation board meant to identify and block potential new crises makes sense on a superficial level.

As Bernanke said in a recent presentation at the Federal Reserve Board's annual economic symposium, U.S. regulators now “focus on the financial conditions of individual institutions in isolation” and might not appreciate how their decisions could interact with other public and private sector decisions in a way that harms the economy.

But the problem with this argument is that it builds on the view that no one saw the subprime mess coming. That is just not true.

Earlier this decade, when no-money-down, no-income-verification home loans became common, lots of people warned of the risks. When teaser interest rates with minuscule initial mortgage payments and massive later payments became common, many folks said this practice was dangerous. When all these dubious loans were packaged as securities, many sharp investors figured out this was folly and fled companies holding those securities.

Where was then-Federal Reserve Board Chairman Alan Greenspan as this madness unfolded? Where were Treasury Secretaries John Snow and Henry Paulson? Where was Securities and Exchange Commission chief Christopher Cox?

All of these men had the power to do something to stop the housing bubble from recklessly inflating. The idea that they did nothing because they were focusing on the “micro” picture absolves them — and they don't deserve to be.

So we oppose the idea of a new “macro” regulator. Instead, all major government stewards of the economy must understand from here on out that they need to keep an eye on the big picture — not just their own fiefdoms.

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