Bernanke confirmed for second term as Fed chairman

The Senate voted to confirm Ben Bernanke as chairman of the Federal Reserve today, but it was hardly a ringing endorsement:

The 70 to 30 vote was the thinnest approval ever extended to a chairman in the central bank’s 96-year history.

The confirmation was a victory for President Obama, who had called Mr. Bernanke an architect of the recovery, but also signaled the extent to which the Fed, once little known to the public, has become the object of populist outrage over high unemployment and Wall Street bailouts.

In several hours of debate, senators said the Fed had abetted, then ignored, the housing and credit bubbles and allowed banks to keep dangerously low capital reserves and to make reckless lending decisions that ruined consumers. Some even blamed Mr. Bernanke for the falling dollar and questioned his commitment to free enterprise.

In contrast, Mr. Bernanke’s supporters were muted. Like a mantra, they said that the Fed had made mistakes but that Mr. Bernanke had helped save the economy from a far worse recession.

Eleven Democrats, 18 Republicans and independent Bernie Sanders voted against confirming Bernanke (roll call here).

Senators of both parties who opposed Bernanke said his monetary policy and poor oversight contributed to the financial meltdown of 2008. Various Democrats who voted against Bernanke said he had been too beholden to Wall Street interests. Senator Chuck Grassley of Iowa surprised me this week by claiming Bernanke wasn't doing enough to prevent high inflation from returning. I would think that in this economic environment, with high unemployment and declining wages, deflation would be more of a concern than high inflation.

I still think it was a mistake for Obama to nominate Bernanke for another term, but let's hope the Fed chairman improves on the job.

UPDATE: MIT economist Simon Johnson considers Bernanke's reappointment and confirmation "a colossal failure of governance. Worth a read.

SECOND UPDATE: I should have mentioned that seven senators voted for cloture (allowing the Senate to proceed to consider Bernanke's nomination) before voting against confirming him. Here is the roll call on the cloture vote. The senators who voted for cloture but against Bernanke are Democrats Tom Harkin (IA), Barbara Boxer (CA), Byron Dorgan (ND), Al Franken (MN), Ted Kaufman (DE), and Sheldon Whitehouse (RI), along with Republican George LeMieux (FL).

Tags: Ben Bernanke, Federal Reserve, Senate, Congress, Bernanke confirmation (all tags)

Comments

7 Comments

Bernanke

He must have worked his butt off last year. The bad thing is right now we are in the same pattern as France in 1940--Phony War--they got convinced every thing was going to be OK but then got totally over run in a few months.

I'm thinking that we are in an economic lull right now. This situation is very abnormal for the USA. In every other recession since 1900, we have had the world's largest manufacturing and production capacity to pull us out once liquidity returned (usually after 18 months). The exception is 1934-1941--the economy never returned. I agree with the author of the piece--the Fed should be scared silly over the prospect that we are going to have a major deflation: i.e real estate (still going downhill--commercial real estate is just now going south), farms, any kind of leveraged asset is going down hill still, AND WORST OF ALL EMPLOYMENT AND WAGES ARE REALLY CRASHING. The stock market has a "little bubble". But consider this (I figure Bernanke knows this)--the USA is in the same stage of the crisis that we were in in 1933. THAT MEANS PEOPLE that we have 8 more years for this thing to run its course......its SCARY....

Maybe we are lucky--at least Greenspan wasn't resurrected....

 

by hddun2008 2010-01-28 09:07PM | 0 recs
Bernanke

He must have worked his butt off last year. The bad thing is right now we are in the same pattern as France in 1940--Phony War--they got convinced every thing was going to be OK but then got totally over run in a few months.

I'm thinking that we are in an economic lull right now. This situation is very abnormal for the USA. In every other recession since 1900, we have had the world's largest manufacturing and production capacity to pull us out once liquidity returned (usually after 18 months). The exception is 1934-1941--the economy never returned. I agree with the author of the piece--the Fed should be scared silly over the prospect that we are going to have a major deflation: i.e real estate (still going downhill--commercial real estate is just now going south), farms, any kind of leveraged asset is going down hill still, AND WORST OF ALL EMPLOYMENT AND WAGES ARE REALLY CRASHING. The stock market has a "little bubble". But consider this (I figure Bernanke knows this)--the USA is in the same stage of the crisis that we were in in 1933. THAT MEANS PEOPLE that we have 8 more years for this thing to run its course......its SCARY....

Maybe we are lucky--at least Greenspan wasn't resurrected....

 

by hddun2008 2010-01-28 09:07PM | 0 recs
Disgraceful

That this crook would actually be nominated again and confirmed. It speaks volumes abotu the corruptiona and incompetence in Washington

by BuckeyeBlogger 2010-01-28 09:39PM | 0 recs
Hardly?

70-30 sounds like a ringing endorsement to me, given the kind of polarization in country.

by vecky 2010-01-28 09:49PM | 0 recs
RE: Hardly?

No other Fed chairman nominee ever got more than 16 "no" votes in the Senate. This is quite unusual.

by desmoinesdem 2010-01-28 10:00PM | 0 recs
..and Cloture still stands

One less discussed aspect of this - there were rumors that Reid had brokered a deal so that some Dems could vote for cloture, but vote against Bernanke in the end. That deal, apparently either fell through or wasn't necessary; the vote was 70-30 on the procedural, and 70-30 on the actual confirmation.

That may seem obvious... but had anyone voted for cloture and against the bill... there would be a perfect rebuttal to the Semators who refuse to consider taking up the healthcare compromise bill through cloture and then vote against it.

by nycweboy1 2010-01-28 11:45PM | 0 recs
RE: ..and Cloture still stands

The vote on cloture was 77-23.

by Steve M 2010-01-28 11:46PM | 0 recs

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