The White House has signaled that it will reappoint Federal Reserve Chairman Ben Bernanke to a second term. President Obama will officially announce the reappointment today at 9 a.m. from Martha's Vinyard, where he is on vacation.
The Associated Press reports that his prepared remarks will include the statement, "Ben 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 freefall."
There have been a number of critics to Bernanke's approach. Some believe that the Fed was too involved in solving the banking crisis, that its actions were beyond the role reserved for it by Congress and that this might undermine its traditional independence. Others feel that Bernanke's plans to keep interest rates down could fuel inflation over the long term.
Obama put concerns over Bernanke's tenure aside. One of the reasons is that the Fed chief is viewed as having been the major architect for the reversal of fortunes of the financial and credit systems. Another is that the Fed will have to continue to play a role in the recovery, which is still very fragile.
Perhaps the most important reason for The White House decision is that the size of the deficit and the financial risks of the health care reform package have caused the public to question the Administration's financial plans. Bernanke is a popular figure both on and off Wall Street. He gives the Administration continuity in a critical part of the government. That, all by itself, could earn points for the President. In Washington, all decisions are political.
Douglas A. McIntyre is an editor at 24/7 Wall St.