Does Ben Bernanke Deserve A Second Term?
By David Dierking
One of the more intriguing stories coming out of Capitol Hill recently has been the struggle over whether or not Ben Bernanke will (or perhaps more importantly should) be nominated for a second term as Chairman of the Federal Reserve.
To briefly recap events, President Obama announced in late 2009 that he would nominate Bernanke for a second term amid speculation that he was leaning toward replacing the one-term Chairman. Opposition to the confirmation arose last week when two key Democratic senators – Russ Feingold of Wisconsin and Barbara Boxer of California – announced that they would formally oppose a second Bernanke term. The senators’ decision to speak out suggested that there was growing bipartisan discontent for the Chairman and indicated that he might need strong Republican support in order to earn a second term.
Both proponents and opponents of Bernanke feel they have a strong case. Supporters will argue that Bernanke and the Federal Reserve guided America through the greatest economic downturn since the Great Depression and his guidance helped stabilize a crumbling financial industry. Adversaries will contend that the housing market collapsed, predatory lending thrived and the government spent billions in bailouts under Bernanke’s watch.
Many Americans are currently struggling with unemployment and staying current on their mortgage and want their senators to empathize with their plight. Backing a Fed Chairman who was on watch during a period where banks extended credit to people who had no hope of paying it back while paying out millions of dollars in bonuses to “fat cat bankers” as Obama referred to them could be viewed as political suicide. The election in Massachusetts was a signal that Democratic support among Americans is wavering and elected officials undoubtedly want to stay in the good graces of the voting public.
On Monday, it appeared likely that Bernanke will be confirmed for a second term as Chairman but is that what’s best for Americans? What is clear is that if that is indeed the case he’ll be under a much closer watch now than during his first four years.
He’ll be under a lot of pressure to make sure that he is providing the resources necessary to create jobs and spur lending to the average consumer yet managing to keep inflationary pressures in check. The notion of “free money” is what caused a lot of the problems of the last few years so Bernanke will need to maintain a careful balancing act of getting money in the hands of consumers while keeping the economy from overheating and torpedoing the value of the dollar.
I, for one, would give him another shot. I don’t believe it’s appropriate to place all the blame on him or the Fed for the country’s recent economic shortfalls but it is clear that he needs to maintain tighter controls over what’s going on. I also believe that the Fed’s actions prevented a severe economic recession from turning into what could have been a full blown catastrophe.
That having been said it will be imperative for Bernanke to demonstrate that he can maintain stronger oversight over banks and lending institutions and show that he can get ahead of any potential obstacles that could affect this economic recovery. His actions will play a large part in how swiftly and successfully America is able move forward.
I’d give him four more years.
Photo credit: trackrecord
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