MercoPress. South Atlantic News Agency

Fed chairman Bernanke’s reconfirmation is almost a fact

Time magazine has named him the person of the year.

Ben Bernanke's nomination to a second term as head of the US Federal Reserve has been approved by a Senate panel. Members of the Senate Banking Committee voted on Thursday 16 to seven to back Mr Bernanke as head of the central bank.

This means that the nomination will now proceed to the Senate floor for a full vote on his reconfirmation. Mr Bernanke is likely to be approved.

Despite that, the Fed chairman has faced hostility from senators over his handling of the financial crisis.

Senator Bernie Sanders of Vermont, for example, has said that he will attempt to block the nomination when it comes to a vote.

Under Mr Bernanke's tenure, the Fed has cut interest rates close to zero, as well as spending 3 trillion US dollars to buoy the financial markets.

It also handled the collapse of Lehman Brothers, the largest bankruptcy in US history and supervised the bail-out of the insurer AIG, which received a total of 182.5bn USD of government funding.

In partnership with the US Treasury, the Fed organised the 700bn USD bank bail-out plan in October 2008.

Bernanke has defended the central bank's response to the global crisis.

He was named as head of the Fed by President Barack Obama's predecessor, George W Bush, in 2005.

Bernanke has also had strong backing from some of the US press with Time magazine naming him the person of the year.

“The recession was the history of the year. Without Ben Bernanke it would have been a lot worse” said Richard Stengel, managing editor of Time magazine.

In an interview with Time, Bernanke admits to mistakes, including underestimating the severity of the fallout likely from the sub-prime mortgage market failure, but he says his academic studies of the Great Depression assured him that bailing out the financial system was essential to preventing a recession from turning into a second depression.

There has rarely been such a perfect revision of the cliché that “those who do not learn from history are doomed to repeat it” said Time magazine. “Bernanke didn't just learn from history; he wrote it himself and was damned if he was going to repeat it“.

However there has been public opinion rising criticism of the Fed. One poll by Rasmussen Reports this month showed US public support for Bernanke's nomination at just 21%, with 41% opposing it, but he continues to enjoy support on Wall Street and among many lawmakers.

Dissent with Bernanke can be resumed in the words of Jim Bunning, a fierce Republican critic of the Wall Street bailout, who scoffed at Time's pick. ”I find it ironic that a man who has spent the last year rewarding others for failure is now being named person of the year,“ he said. ”But if Time magazine is in the business of rewarding failure, Ben Bernanke is their man.“

Justifying his negative vote on Thursday Senator Bunning said: ”I have always believed that when you fail at something in life you lose and when you succeed at something in life you win. It’s just that simple. Ben Bernanke’s term as Chairman of the Federal Reserve has been a failure and that is why I am opposing him”.

“Not only was Chairman Bernanke asleep at the switch leading up to the current financial crisis, but the policies he has implemented have done nothing to solve the problem. In fact, I would argue that his policies will only serve to create more problems for our country down the line. He has been printing money at a break-neck pace in order to bail out his fat-cat buddies on Wall Street and he has turned the Federal Reserve in to an arm of the Treasury Department, while at the same time providing no real answers as to what his end-game plan is”.

”I, along with other members of the Senate and the public, have many questions about who is benefiting from all this printed money and where exactly it is going. Specifically, I have asked to see documents related to AIG and the Federal Reserve’s role in the bailout but have been stonewalled at every turn. It has come to my attention that Chairman Dodd’s staff has seen some of the documents related to AIG, but until today had refused to brief my staff on them. Chairman Dodd has promised that members of the committee who wish to see these documents will be allowed to do so before the floor vote on Chairman Bernanke and I plan to take him up on the offer. I want to know what Chairman Bernanke has to hide.

“While I do believe Ben Bernanke is a very good human being, he doesn’t have a clue what he is doing as Chairman of the Federal Reserve.”