- The Washington Times - Wednesday, August 26, 2009

President Obama’s decision on Tuesday to nominate Federal Reserve Chairman Ben S. Bernanke for a second term played to generally good reviews on Capitol Hill and Wall Street, though the former college professor would face some knotty challenges managing the economy during the next four years if confirmed.

“The Federal Reserve, like other economic policymakers, has been challenged by the unprecedented events of the past few years,” said Mr. Bernanke, in accepting his nomination. “We have been bold or deliberate as circumstances demanded, but our objective remains constant: to restore a more stable economic and financial environment in which opportunity can again flourish.”

Key senators from both major parties applauded Mr. Bernanke’s renomination.

Senate Majority Leader Harry Reid said Mr. Bernanke’s renomination “will bring continuity to the Federal Reserve that will send the right signal to the marketplace.”

“Chairman Bernanke has played an important role in our nation’s economic recovery efforts,” the Nevada Democrat said. “His expertise and leadership as Federal Reserve chairman have been crucial as our nation has endured this financial crisis.”

Sen. Judd Gregg of New Hampshire, the top Republican on the Senate Budget Committee, said Mr. Bernanke’s “experience, independence and originality have so far proven extremely effective in bringing us back from the precipice last year when our financial system was about to implode.”

Sen. Charles E. Schumer warned that Mr. Bernanke’s Senate confirmation hearing should not be used “as a stage by those with wrongheaded political agendas like trimming the Fed’s independence.”

“Whatever one’s view of the Fed’s past lapses, there is no disputing that Bernanke is the best person for the job going forward,” the New York Democrat said.

Senate Banking, Housing and Urban Affairs Chairman Christopher J. Dodd, Connecticut Democrat, said that while he has had “serious differences” with the Fed in recent years, Mr. Bernanke “is probably the right choice.”

The Financial Services Forum, which represents the country’s largest banks and insurers, also praised the Fed chairman for his “bold action and innovative responses” to the recent financial crisis.

“Chairman Bernanke is held in high regard by his regulatory peers in the United States and abroad,” said Rob Nichols, the group’s president and chief operating officer.

News of Mr. Bernanke’s pending appointment, coupled with positive consumer and housing reports released Tuesday, was met favorably by Wall Street, with the Dow Jones Industrial Average, the Standard & Poor’s 500 Index and Nasdaq Composite Index posting gains.

But Mr. Obama’s announcement to stick with the chairman for another term also came as the White House announced that the U.S. budget deficit would exceed $1.5 trillion in fiscal 2009 and fiscal 2010.

And while the economy slowly has showed signs of improvement in recent months, economists say it’s too early to tell whether Mr. Bernanke’s policies as Fed chairman will have a long-term positive impact. And if confirmed, the chairman would be forced to work in an unsettled economic environment.

“While the jury is still out and there’s a long way to go, [Mr. Bernanke] is a pretty decent guy to have in that spot,” said Anthony Sabino, a professor of law, business and economics at St. John’s University in New York. “He certainly hasn’t dropped the ball; he’s run with the ball as best he’s could.”

But Mr. Bernanke’s nomination was met with some caution, and even a few boos, on Capitol Hill and elsewhere.

Senate Minority Leader Mitch McConnell, Kentucky Republican, took no position Tuesday on whether to support Mr. Bernanke for another four-year term.

“Chairman Bernanke’s confirmation hearing will be an opportunity for the chairman to provide greater transparency on the actions the Fed has taken,” he said.

Sen. Bernard Sanders, Vermont independent, pulled no punches in accusing Mr. Bernanke of being “asleep at the wheel” during the recent financial crisis.

He “did nothing to move our financial system onto safer grounds,” Mr. Sanders said. “We need a chairman of the Federal Reserve who is more concerned about expanding the productive economy … than continuing to fan the flames of Wall Street greed and outrageous compensation packages.”

Why Mr. Bernanke would want to remain as head of the Fed for another four years - arguably one of the trickiest jobs in Washington, even during the best of economic times - should come as no surprise, Mr. Sabino said.

“The reason he would want it is the same reason that men and women aspire to be the president,” he said. “It’s an incredibly important position in America and on the world stage. It’s a position of great power and influence, and it is a position that one can - from a minimum - participate in history and oftentimes make history.”

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