Obama Set To Keep Bernanke As Fed Chief

Filed by KOSU News in US News.
August 25, 2009

President Obama will nominate Federal Reserve Chairman Ben Bernanke to a second four-year term, ending speculation that the man widely credited with stemming a wholesale financial might be cast aside.

The president, on vacation at Martha’s Vineyard in Massachusetts, was expected to make the announcement Tuesday morning, in a move aimed at continuity as the economy pulls out of recession.

In his prepared remarks, Obama praised the Fed chief, saying he approached “a financial system on the verge of collapse with calm and wisdom, with bold action and outside-the-box thinking that has helped put the brakes on our economic free-fall,” The renomination requires Senate confirmation.

“The actions we have taken to stabilize our financial system, repair our credit markets, restructure auto industry and help the overall economy recover have all been steps of necessity, not choice. They have faced plenty of critics, some of whom argued that we should stay the course or do nothing at all. But taken together, all of these steps have brought our economy back from the brink. They are steps that are working,” the president said.

Bernanke, 55, and a former the Princeton University professor, was appointed Fed chairman by President George W. Bush and sworn in in February 2006.

The Fed chairman, however, has not been without detractors who say he should have acted more quickly to address the subprime mortgage and derivatives meltdowns. He has also faced criticism from both Democrats and Republicans in Congress who say his massive support to the financial industry will eventually cause a sharp increase in inflation.

Even so, Democrats seemed to be lining up behind his continued tenure.

“While I have had serious differences with the Federal Reserve over the past few years, I think reappointing Chairman Bernanke is probably the right choice,” Senate Banking Committee Chairman Christopher Dodd (D-CT) said in a statement.

Obama hopes Bernanke can help nurse the economy back from recession even as Americans continue to lose jobs in record numbers and the housing market has yet to stage a decisive turnaround.

Meanwhile, Wall Street has given Bernanke high marks and his reappointment is likely to be received well by most investors. His study of the Great Depression is credited with helping him respond to the current crisis with programs to unfreeze credit markets and get banks lending again.

There had been talk of Bernanke being replaced by Lawrence Summers, the top White House economic adviser and a former U.S. Treasury secretary. That possibility, however, was widely viewed as presenting a conflict of interest for the Fed, which is seen as independent despite the presidential appointment of the chairman.