12/03/2009 (5:14 pm)
Bernanke Has Support of Majority on Banking Panel
Ben S. Bernanke has the backing of a majority of U.S. senators on the Banking Committee for a second term as Federal Reserve chairman.
Eight Democrats and four Republicans, among the 23 lawmakers on the panel overseeing the central bank, made their views known in interviews, comments to reporters or written statements. Some said they will support Bernanke, while others said they’re leaning in his favor.
Committee Chairman Christopher Dodd, a Connecticut Democrat, said yesterday that Bernanke has “done a pretty good job,” and that anger in Congress over the Fed’s role in the financial crisis is “misplaced.” Judd Gregg, a New Hampshire Republican, said Nov. 20 he will “absolutely” vote for Bernanke.
Criticism of the central bank has mounted in Congress since President Barack Obama nominated Bernanke in August, with many lawmakers blaming the Fed for lax supervision of banks and for taking part in taxpayer-funded bailouts of companies including Citigroup Inc. Some senators said those concerns won’t stop them from backing the former Princeton University economist.
“He’s been far from perfect,” Senator Sherrod Brown, an Ohio Democrat, said in an interview yesterday. “He was not quick enough responding last year to many of these issues that we care about, particularly in housing. I want him to focus on jobs. But I think he’s generally done a decent job.”
Hearing Tomorrow
The banking panel holds a hearing on Bernanke’s nomination tomorrow in Washington. A vote hasn’t been scheduled, and the full Senate would then need to confirm the Fed chief. Bernanke’s four-year term ends Jan. 31.
Traders on Intrade, an online futures exchange, give Bernanke a 90 percent chance of Senate confirmation, up from 89 percent yesterday.
The Fed under Bernanke has slashed interest rates almost to zero and pumped more than $1 trillion into the financial system to battle the deepest recession since the 1930s. The Standard & Poor’s 500 Index has jumped 64 percent from its 2009 low on March 9 as the economy showed signs of revival.
Policy makers last month repeated their pledge to keep rates low for an “extended period” to bring down an unemployment rate at a 26-year high. A government report Dec. 4 is likely to show that companies reduced payrolls for a 23rd straight month, according to a Bloomberg survey of economists.
Dodd said in August that while he’s had “serious differences” with the Fed, reappointing Bernanke is “probably the right choice.”
‘Pins and Needles’
Asked yesterday about his vote, Dodd told reporters, “I want you to be on pins and needles and wait until Thursday to hear this exciting news.”
Jim Bunning, the Kentucky Republican who was the only senator to oppose Bernanke’s first nomination in 2005, hasn’t changed his views.
“His job rating would be zero minus F,” Bunning said in an interview yesterday. “He has catered to the big banks, to the Wall Street elitists, to every major money concern in the country and in the world.”
Senator Bernard Sanders, a Vermont independent who isn’t on the banking committee, said today that he placed a procedural hold on Bernanke’s nomination, which requires 60 votes to break. “Mr. Bernanke has failed,” Sanders said in an e-mailed statement. “It’s time for him to go.”
The other Democrats on the banking panel expressing support for Bernanke include South Dakota’s Tim Johnson, Jack Reed of Rhode Island, New York’s Charles Schumer, Evan Bayh of Indiana, Hawaii’s Daniel Akaka and Virginia’s Mark Warner.
Three said they’re undecided, including Wisconsin’s Herb Kohl, Jon Tester of Montana and Jeff Merkley of Oregon.
‘Earth Shattering’
Among Republicans, Nebraska’s Mike Johanns said Bernanke “will have my support.” Utah’s Robert Bennett said he’ll probably vote in favor, while Bob Corker of Tennessee said he is likely to back Bernanke “if nothing earth-shattering comes out of the hearings and the follow-ups.”
Alabama Senator Richard Shelby, the panel’s top Republican, declined to comment except to say, “You’ll be there Thursday.”
Bernanke, 55, has presided over the most expansive use of Fed powers since the 1930s, taking control of insurer American International Group Inc. and launching unprecedented programs to contain fallout from a run on money-market funds and to buy short-term debt from companies such as General Electric Co.
Some lawmakers have accused the Fed of overstepping its authority and failing to properly supervise the financial firms that packaged and sold the mortgage-backed securities at the heart of the crisis.
‘Abysmal Failure’
Dodd, calling the Fed’s record on banking supervision an “abysmal failure,” introduced legislation in November that would strip the central bank of that role. Also last month, the House Financial Services Committee approved a proposal to remove a three-decade ban on congressional audits of Fed interest-rate decisions.
The Fed chief said in a Nov. 29 commentary in the Washington Post that curbing the central bank’s authority to supervise the banking system and tampering with its independence would “seriously impair” economic stability in the U.S.
Frederic Mishkin, a former Fed governor who now teaches at Columbia University in New York, called the measure that would allow audits of Fed policy “incredibly dangerous.”
“If you make the central bank beholden to politicians on a short-run basis, you get very bad outcomes: high inflation and less of the ability to deal with shocks like the ones we had recently,” Mishkin said yesterday in an interview.