- The Washington Times - Friday, December 4, 2009

Federal Reserve Chairman Ben S. Bernanke on Thursday vigorously defended his handling of last year’s near collapse of the economy, telling a Senate panel considering his reconfirmation that his actions helped avert an even greater crisis.

The nation’s central banker assured lawmakers that his agency has the necessary tools to further repair the still wobbly economy - a push-back at congressional proposals to curtail the Federal Reserve’s regulatory powers.

“We played a central role in efforts to quell the financial turmoil,” he told a Senate banking committee hearing.

But Mr. Bernanke also acknowledged the Federal Reserve’s failure under his watch to foresee the economic crisis before it almost toppled Wall Street and promised to make sure it doesn’t happen again.

“Heeding the lessons of the crisis, we are committed to taking a more proactive and comprehensive approach to oversight,” he said.

Mr. Bernanke is facing significantly closer scrutiny this time than he did during his near-unanimous confirmation four years ago, most notably for his role in engineering the unpopular $700 billion taxpayer-funded bailout of Wall Street.

Still, the former Princeton University professor has enough Senate support that confirmation for a second four-year term appears safe.

Mr. Bernanke reminded the senators that he slashed interest rates to almost zero and pumped more than a trillion dollars into the financial system to beat back the worst financial crisis since the Great Depression.

He also said the Federal Reserve is prepared to end government aid to the financial sector, saying that the Wall Street bailout program will be phased out “in a smooth and timely way as markets and the economy recover.”

Committee Chairman Christopher J. Dodd, Connecticut Democrat, said he would support Mr. Bernanke’s reconfirmation because that he was “the right leader for this moment in our nation’s economic history” and that his renomination “sends the right signal to the markets.”

But Mr. Dodd, eager to distance himself from criticism that he is too cozy with Wall Street, has called for changes to the Federal Reserve’s regulatory mission.

“I worry that over the years loading up the Federal Reserve with too many piecemeal responsibilities has left important duties without proper attention,” he said.

Mr. Dodd last month introduced a bill to overhaul the financial sector and scale back some of the Federal Reserve’s regulatory authority.

Mr. Bernanke, who has warned such action would handcuff his the agency’s ability to monitor and stabilize the economy, held back from directly criticizing Mr. Dodd’s bill on Thursday.

Story Continues →