Bernanke vote in the Senate gives Fed chairman another term

Senators approved a second term for Federal Reserve Chairman Ben Bernanke Thursday to avoid turmoil in world financial markets. But the Bernanke vote saw 30 members oppose his nomination.

Jose Luis Magana/AP
Federal Reserve Chairman Ben Bernanke testifies on Capitol Hill in Washington before the Senate Banking Committee hearing on his renomination. On Thursday, the Senate confirmed Bernanke for a second term as Fed chair.

Federal Reserve Chairman Ben Bernanke won a second term on a bipartisan vote in part because many Senators believed that rejecting him could roil world financial markets.

The Bernanke vote Thursday was 70 to 30 in his favor.

“A vote against confirmation would unnerve investors and exacerbate uncertainty in an economy that needs confidence and security, not volatility,” said Sen. Robert Menendez (D) of New Jersey during debate on the Senate floor, expressing a sentiment shared by a number of his fellow lawmakers.

Originally appointed Fed chief by President George W. Bush, Bernanke was tapped for a second term last August by President Obama. However, his road to Thursday’s reconfirmation vote was unexpectedly rocky.

Rocky road to a second term

In part, this was due to the voter response to US bailouts for banks, auto firms, insurance giant AIG, and other financial institutions. The mild, professorial Bernanke, head of a semi-autonomous agency whose actions are difficult to understand, quickly became the target for this populist ire.

“I understand there is this populist fervor around right now … and populism usually has to have an enemy,” said Sen. Judd Gregg (R) of New Hampshire, a Bernanke supporter, during Thursday’s debate.

In addition, Bernanke’s actions in regard to the $182 billion rescue of insurance giant American International Group have come under particular scrutiny in Congress. Some lawmakers suspect that US officials helped conceal how damaged AIG was in the days before and just after that rescue, so as to conceal how much the move might cost taxpayers.

“The full story of AIG has yet to be told,” said Sen. Richard Shelby (R) of Alabama, ranking minority member on the Senate Banking committee.

Senators weigh in

Sen. Shelby voted against Bernanke, adding that the Fed chief’s actions in helping feed the housing bubble led to the economic melt-down in the first place.

“I believe it is far more important to consider the facts surrounding Chairman Bernanke’s record than it is to speculate about the impact of his departure,” said Shelby.

Other Senators on Thursday praised Bernanke for helping the US – and the world – avoid a full financial meltdown last fall.

He made the Fed the lender of last resort for US banks and other financial institutions, and did so quickly and with great creativity, according to his Senate proponents.

“He allowed the Fed to become the lender of the nation. Nobody had ever done that. . . He deserves credit for having been willing and courageous enough to have made these types of decisions,” said Sen. Judd Gregg (R) of New Hampshire on Thursday.


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