Bernanke Wins Senate Confirmation
US Federal Reserve Chairman Ben Bernanke overcame stiff opposition in the US senate and was confirmed by a vote of 70-30. Democrats voted 47-11 in Bernanke’s favor and Republicans voted 22-18 for confirmation. Bernanke will serve another four year term beginning February 1st 2010. Despite the victory legislators may propose legislation that would allow congress to audit the Fed and remove the Fed’s bank supervision powers a move Bernanke opposes. Vincent Reinhart, a former Fed official stated, “I can’t imagine that there will not be separate legislation or some piece of legislation that is the Federal Reserve Reform Act of 2010.” Bernanke received the most opposing votes since the Senate started confirming Fed chairmen in 1978. Prior to 1978 the Senate confirmed members of the Fed’s board of governors and the President appointed the Fed chairman from the board of governors.
Distrust Of the Fed Widespread
Many distrust the Federal Reserve and in the House of Representatives uber conservative Ron Paul has repeatedly called for the abolition of the Federal Reserve. Paul garnered 300 supporters last month and passed legislation that would allow congressional investigators to audit Fed rate decisions. Legislators are also attempting to reduce the influence of regional Fed presidents and gain more power over Fed appointments. Former Fed economist Gregory Hess stated, “There are going to be additional constraints put on the Fed unless the administration leans hard to defend the Fed as an independent institution.” Former Fed Governor Laurence Meyer stated that US stocks, bonds and the dollar could collapse if investors think congress is meddling with the Fed policy setting panel and violating its independence.
Bernanke Opponent Says “Banks Win”
Some opposition to Bernanke’s confirmation was caused by resentment over banks reluctance to lend bailout finds provided by the Fed and the payment of large bonuses to executives while millions of Americans have lost jobs. Rhode Island Democrat Sheldon Whitehouse said the chief beneficiaries of emergency measures taken by the Fed were Wall Street firms. Whitehouse stated; “If you’re the scorekeeper of our recovery, it looks like it can be summarized in the two-word phrase: Banks win.” Obviously Whitehouse voted against Bernanke.
Schumer Says Fed Needs Independence
New York Democrat and Bernanke supporter Charles Schumer said that congressional measures to reduce Fed independence could lead to meddling by politicians into such policies as interest rates. Schumer summed up his position when he said; “If you don’t like monetary policy when the Fed does it, just wait until the politicians get their hands on it.”
