Love him or hate him, Ben Bernanke, also known as Time magazine's Man of the Year, is likely headed for a second term as chairman of the Federal Reserve after the Senate Banking Committee gave him the thumbs up. The vote was 16 - 7 on Thursday. The chairman's nomination for another four years helming the nation's central bank now moves to the full Senate for confirmation.
%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%%As America's No. 1 student of the Great Depression, Bernanke has followed a policy of keeping short-term rates at essentially zero since December 2008, which has polarized investors, economists and market watchers. Depending on one's point of view, flooding the financial system with liquidity either saved the world from collapse or just served to kick systemic weaknesses in the banking sector down the road.
Sen. Richard Shelby of Alabama, the senior Republican on the committee, voted against the confirmation, as did vocal critic Sen. Jim Bunning (R., Ky.). In all, six of the panel's 10 Republicans voted against a second term for "Helicopter" Ben, as did a single Democrat, Jeff Merkley of Oregon, according to The Wall Street Journal.
"As chairman, Dr. Bernanke failed to recognize and remedy the factors that paved the road to this dark and difficult recession," Merkley told the Senate Banking Committee. "Following the collapse of our economy, it is apparent that Dr. Bernanke has not changed his overall approach of prioritizing Wall Street over American families."
"We Must Know What the Fed Is Hiding"
Bunning has repeatedly pressed the Fed for details about the extraordinary role it played in saving major Wall Street firms such as American International Group (AIG) from collapse last year. "I hope and ask that every member of the committee will join me in demanding that we be given this information before moving forward," Bunning said. "We must know what the Fed is hiding from us and from the American people."
Kay Bailey Hutchinson, (R., Texas) voted against the sitting chairman over concern about how funds from the Troubled Asset Relief Program has been used. TARP is a Treasury Department program, but Bernanke has been a strong supporter.
The Fed has but two mandates: promote stable prices and maximum employment. But these days it has been into all sorts of unusual activities since the financial system nearly melted down last year, including buying up longer dated Treasurys to keep interest rates down.
Bernanke's current term ends Jan. 31. The full Senate isn't expected to vote on his nomination until next month.
Bernanke Gets Senate Panel Approval for a Second Term