Not long ago, it looked like Ben Bernanke’s reappointment as chairman of the Federal Reserve would get the old rubber stamp in the Senate. But based on events this week, Bernanke might want to dust off the old resume this weekend. Just in case.
Today, two prominent Democratic Senators said they would vote against Bernanke — Wisconsin’s Russ Feingold and California’s Barbara Boxer:
“It is time for a change — it is time for Main Street to have a champion at the Fed,” Boxer said in a statement. “Dr. Bernanke played a lead role in crafting the Bush administration’s economic policies, which led to the current economic crisis. Our next Federal Reserve Chairman must represent a clean break from the failed policies of the past.”
Bernanke’s term is up January 31st. He needs 60 votes in the Senate to force a confirmation vote, and there are conflicting reports on whether or not the votes exist.
So what has suddenly put the vote in jeopardy? Does the name Scott Brown ring a bell? From the New York Times:
To some degree, Mr. Bernanke is caught up in the same kind of populist anger that defined the Massachusetts Senate race, in which the Republican candidate, Scott Brown, pulled off a remarkable upset on Tuesday by beating his Democratic opponent to take the seat long held by Edward M. Kennedy.
Opposition to Mr. Bernanke has emerged from both the left and the right, as anger has mounted over the Fed’s extraordinary interventions in the market in 2008 — which have been lumped together with the huge bailouts of big financial institutions — and over the perceived regulatory failings of the Fed in the years preceding the crisis.
Today, White House spokesman Bill Burton said the president still has “a great deal of confidence” in Chairman Bernanke and in the likelihood that he’ll be confirmed. He may well be, and the doubt about the vote might just be political theater. But there’s a nervousness out there that’s being reflected in Treasury prices and the stock market.
From Marketwatch:
Dan Greenhaus, chief economic strategist, Miller Tabak & Co., said perceptions of Bernanke’s political perils are “another piece of uncertainty in an already uncertain market.”
“But at this point, it’s not taken very seriously and people think it’s pretty likely he’ll get approved. But there’s a growing sense in the opposition that there’s political gains to be made from the situation,” coming in the wake of the Massachusetts vote and Obama’s new bank plan, Greenhaus said.
Even if Bernanke was replaced, he has a seat on the Fed board of governors until 2020.
Bernanke runs the Federal Open Market Committee, which determines interest rates. It holds its first meeting of the year next Tuesday and Wednesday.
Could it be Bernanke’s last?
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