Bernanke to remain
Members of the U.S. Senate are likely to present Ben Bernanke with some tough questions during confirmation hearings, now that President Barack Obama has nominated him to serve a second term as Federal Reserve Board chairman.
But the Senate is unlikely to reject Bernanke’s confirmation because, even among the 100 oversized egos in the Senate, there aren’t many people who think they know better than Bernanke about how to get the economy back on track and keep it there.
We think Obama made the right decision in nominating Bernanke. He is, after all, an economic scholar who probably knows as much about the causes and consequences of the Great Depression as anyone. Moreover, he is a stabilizing voice for the Fed, who instills confidence in the financial sector. That fact was borne out when all major U.S. stock markets jumped substantially in the wake of the announcement that Obama had nominated him for a second term.
And, although he was late in reacting to the financial crisis, Bernanke’s forceful push to provide assistance to key financial institutions is believed by many economists to have prevented a bank panic and to have eased the credit crunch.
Still, there are some important questions we hope senators will ask Bernanke. Such as:
• You continued the policies of former Fed Chairman Alan Greenspan until the economic crisis hit. Do you now think those policies were a mistake?
• Why did you initially push the bank bailouts as a means for the government to purchase bad housing debts from financial institutions, only to reverse course and instead loan money directly to the banks?
• How much involvement should the Fed have under proposed new rules to regulate financial institutions in the wake of the near meltdown?
• If the worst of the recession is over, as you have suggested, when do you believe it will be appropriate to raise interest rates again?
• How is the Fed going to help the nation deal with the burgeoning mountain of debt? Just by printing more currency?
We hope the Senate will ask, and Bernanke will respond sincerely to such questions.
Then we hope the Senate will confirm him.