Bernanke’s reappointment may send wrong message
Federal Reserve Chairman Ben Bernanke appears to be on a roll toward reappointment as head of the nation’s banking system, despite some opposition even from Democratic quarters.
Count us among the opposition.
Bernanke was appointed to head the nation’s banking system by President George W. Bush in 2005 after serving as chairman of Bush’s Council of Economic Advisers. President Obama has nominated him for a second term.
Bernanke “approached a financial system on the verge of collapse with calm and wisdom, with bold action and out-of-the-box thinking that has helped put the brakes on our economic free fall,” President Obama said in reappointing him.
The Senate has the last word in the appointment, though, and some other facts are worth remembering.
While Bernanke helped hold the nation’s financial system together, he also was on the scene when it began to come apart. Had he been more vocal about the toxic mix of subprime mortgages, mortgage-backed securities and the danger of basing a financial system on them, it’s possible that some of the damage could have been averted.
However history evaluates President Bush’s administration, it’s unlikely to look too kindly on its handling of the nation’s economy.
Bernanke’s salvage efforts are not to be underestimated, but it’s clearly time that the Senate and the president cut the banking ties to the old administration, the same old network, and set out on their own course.
Bernanke’s supporters point out that Senate failure to ratify his reappointment will send out signals of instability to an already roiled global marketplace and shake up markets even more.
Indeed, the global economy already is unsteady and lacking confidence.
One sign of that is in a report that came out Wednesday and shows sales of new homes in the United States dropped in December.
It’s a sign that buyers are skittish or that they simply haven’t the wherewithal to purchase new homes.
Other Bernanke supporters say that a change will result in a double-dip or W-shaped recession, which would mean that even the slight improvement of late would soon give way to another slowdown.
The tea leaves, though, seem to be suggesting that possibility already. That’s why we suspect that a powerful dose of more of the same in the form of Bernanke’s renomination and confirmation will do little to spark confidence into consumers and life into markets.
A vote by the Democrat-dominated Senate telling the president to try again, however, might just reassure international markets that the United States is trying to accomplish the president’s promises of a more transparent, better-regulated, more predictable and more stable financial system.