Published January 28, 2010
WASHINGTON -- Federal Reserve Chairman Ben Bernanke, a lightning rod for anger over Wall Street bailouts, is expected to overcome Senate opposition and win a second term as head of the U.S. central bank.
The Senate has scheduled a key vote Thursday that will determine whether Bernanke has at least 60 senators on his side to beat a filibuster aimed at blocking his reappointment. Senate leaders from both parties expressed confidence he would prevail.
Still, the vote could be the slimmest for a Federal Reserve nominee, eclipsing opposition to Paul Volcker in 1983 when he was confirmed for a second term by a vote of 84-16. No Fed chairman has been rejected by the Senate.
The stock market has been rooting for Bernanke. The Dow Jones Industrial average plunged last week amid news of mounting opposition, then recovered when his prospects brightened.
The Federal Reserve wields enormous power over American pocketbooks. It has the power to set interest rates that influence economic activity, employment and inflation. And it help maintain economic stability by making emergency loans to banks when they can't get cash elsewhere.
"I believe that the chairman is going to be confirmed by a bipartisan vote," Senate Republican leader Mitch McConnell said Wednesday.
Widely credited for avoiding a financial catastrophe, Bernanke has angered the public and lawmakers over his support of Wall Street bailouts -- especially the $182 billion rescue of insurance giant American International Group Inc. The criticism has mounted as unemployment has risen to double digits and bankers paid out bonuses.
Critics also blame him for not detecting the coming crisis and failing to rein in the banking industry.
"He was asleep at the switch while Wall Street became a gambling casino," said Sen. Bernie Sanders, a Vermont independent who is among the senators in opposition.
The biggest challenge facing the Fed this year will be how and when to reverse course and raise rates. To foster the recovery, the Fed on Wednesday kept interest rates at a record low and pledged to hold them there for some time.
Though Bernanke may get 60 or more votes to overcome Republican procedural blocking, his support on the final confirmation vote will likely be smaller. Several senators have said they would oppose blocking a vote on his confirmation but would vote against his reappointment.
Sanders stopped short of conceding that Bernanke would win the vote, but he said the close tally would send a message to President Barack Obama.
The confirmation fight and the attacks on the Fed have become a test of central bank independence. The Fed jealously guards its autonomy as a crucial element for carrying out monetary policy, even if it isn't popular with politicians.
Bernanke, 56, was first tapped by President George W. Bush to run the nation's central bank. Obama picked him for a second term in August. His term expires on Jan. 31.
Most of his professional career was in academia. He spent 17 years teaching economics at Princeton.
Bernanke came to Washington to take a job at the Federal Reserve, working with then-Chairman Alan Greenspan. Bush selected him to be his top economist. After that he went on to run the Fed, starting in 2006.