As the Economy Brightens, Government Officials Deserve More Credit

Capitol building in Washington D.C., with flag
Capitol building in Washington D.C., with flag

Investors tend to be skeptical about government intervention in the economy. With the financial crisis, though, much of the healthy questioning spiraled into outright cynicism.

But some officials, like Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner, may deserve more credit than they often get. While many investors had feared that government intrusion following the financial crisis would inevitably cause more turmoil, the official actions seem to have played a major role in stabilizing the economy.

And as a recovery takes shape, the Federal Reserve shows signs of methodically winding down its involvement, contrary to the sustained meddling many had been predicting. The latest indications of the Fed gently heading for the door: an end to buying mortgage securities.

The move follows an announcement that the Treasury Department will unwind its stake in troubled bank Citigroup (C) this year. Other measures taken to provide easy credit during the financial crisis, meanwhile, have also begun getting pulled back.

Also, all the proclamations that the new health care bill would tank the markets have fallen flat.

To be sure, officials are dealing with a complicated and highly risky situation. Their handling of it so far, though, should inspire more confidence in the government's ability to handle such thorny problems.