The Australian
More Democrats come out against Bernanke
- Dow Jones Newswires
- January 23, 2010
FEDERAL Reserve Chairman Ben Bernanke's path to a second term at the helm of the US central bank has become rockier after two more Democrats said they would vote against his nomination.
However, the Fed chief got a boost overnight after Senate Majority Leader Harry Reid said he would vote in favor of Bernanke. Earlier in the day, Reid had said he was still undecided.
Senator Barbara Boxer who faces a tough re-election bid, and Sen. Russ Feingold said they would oppose Bernanke's nomination, joining other US Democratic and independent senators who recently said they will vote against the Fed chief.
"Bernanke played a lead role in crafting the Bush administration's economic policies, which led to the current economic crisis," Sen. Boxer said in a statement, adding the next Fed chief must represent "a clean break from the failed policies of the past."
Bernanke's confirmation, which has been pushed back until next week at the earliest, could be a closer vote than seemed likely just a few weeks ago. President Barack Obama's renewed showing of support for the Fed chairman Friday is a plus for Bernanke, but it's likely to be a tighter vote than previously expected.
The latest Dow Jones Newswires tally Friday based on interviews with 58 senators or their offices showed 25 would vote in favor of Bernanke and 15 against, with 18 undecided.
Bernanke, whose current term expires January 31, was originally named Fed chairman by former Republican President George W Bush. Mr Obama, a Democrat, named him for a second term in August 2009 and the Senate must vote to confirm him for another term. Mr Obama today said he's still confident Bernanke will win another term as Fed chairman.
"[Mr Obama] continues to think he is the best person for the job and will be confirmed by the United States Senate," said White House spokesman Bill Burton.
The White House show of support comes after two Democrats - Senators Byron Dorgan of North Dakota and Jeff Merkley of Oregon - Thursday said they also planned to vote against the nomination. Sen. Bernie Sanders, a Vermont independent who votes with Democrats, has led the charge from the left against Bernanke and also plans a "no" vote.
Democrats are scrambling to show a renewed toughness toward Wall Street amid continued public anger over bankers' pay. Even Obama is sending a similar message, announcing new limits Thursday on the size and activities of the country's largest banks.
However, Senator Reid said he supported Bernanke. "An expert on the Great Depression, Chairman Bernanke helped steer us away from a second one," Reid said in a statement.
A date for the Bernanke nomination has not been set yet. Reid's office said there won't be a filing for cloture on the nomination - a procedural move to block a potential filibuster - on Friday. The earliest would therefore be Monday, putting the cloture vote Wednesday.
Under Senate rules, a cloture vote, requiring 60 senators to limit debate, would come two calendar days after cloture is filed. That vote would be the key vote for Bernanke. A final vote, following up to 30 hours of debate, requires a simple majority.
Former Fed chief Alan Greenspan, who worked closely with Bernanke for several years, voiced strong support.
"Ben Bernanke is far and away the best person to lead the Fed going forward. He should be reconfirmed as soon as possible," Greenspan said in a statement.
Senate Banking Committee Chairman Christopher Dodd, who believes Fed Vice Chairman Donald Kohn would replace Bernanke if a vote isn't held by January 31, said failing to confirm Bernanke could have "huge economic implications."
"If you wanted to send the worst signal to the markets right now in the country and send us in a tailspin, it would be to reject this nomination," Dodd told a group of reporters.
The banking committee last month approved Bernanke's nomination with a 16-7 vote. A senior Senate Republican aide said Friday that he did not believe that Bernanke's confirmation is in jeopardy, citing four Republicans who voted to confirm in the Senate Banking Committee.
A spokesman for Senator Lamar Alexander the No. 3 Senate Republican, said he will vote to reconfirm Bernanke, lending key GOP support to the Fed chief.
Analysts were split on Bernanke's future. Chris Krueger of Washington Research Group put the odds of a Bernanke rejection at 55%. Michael Feroli, economist at J.P Morgan, said his informal polls of "some smart Washington types" put the odds that Bernanke will prevail at 60% to 70%.
Bernanke is expected to give up his post to Fed Vice Chairman Donald Kohn if he's not confirmed by Jan. 31. He will remain on the Fed board since his term as a governor runs until 2020.
The Fed's policy-setting committee is slated to convene in Washington, DC, Tuesday and Wednesday and traditionally elects a chairman and vice chairman at its first meeting of the year. The Federal Open Market Committee is set to elect Bernanke as its chairman at that meeting, a move that doesn't require approval of the White House or the Senate.
Dow Jones Newswires
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