- 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.

But Mr. Bernanke’s journey to reconfirmation does face some potential roadblocks.

Committee member Sen. Jim Bunning, the only senator to oppose Mr. Bernanke’s nomination four years ago, called the chairman’s tenure a failure and said he would do everything possible to block or delay his reconfirmation.

“Under your watch, every one of the major banks failed, or would have failed, if you hadn’t have bailed them out,” the outspoken Kentucky Republican said. “In short, you are the definition of a moral hazard.”

Mr. Bunning and at least two other vocal critics of the chairman - conservative Republican Sen. Jim DeMint of South Carolina and liberal independent Sen. Bernard Sanders of Vermont - said this week they would seek to block Mr. Bernanke from serving a second term by placing a “hold” on his pending reconfirmation vote in the Senate.

“Ben Bernanke is an intelligent and well-intended public servant, but the fact is the Fed has failed the American people during his tenure as chairman,” Mr. DeMint said.

The Senate would need 60 votes to override the hold and move forward with a vote.

Although it not expected to derail Mr. Bernanke’s confirmation, the maneuver could slow down the process.

Mr. Bernanke’s term expires early next year.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide