WASHINGTON — Embattled Federal Reserve Chairman Ben Bernanke won confirmation for a second term Thursday, but only by the closest vote ever for the crucial post and after withering criticism from lawmakers for bailing out Wall Street while other Americans suffered in recession.
The Senate confirmed Bernanke for a four-year term by a 70-30 vote, a seemingly solid majority but 14 votes worse than the closest previous vote for a Fed chairman.
The battle over Bernanke’s confirmation has been a test of central-bank independence, a crucial element if the Fed is to carry out unpopular but economically essential policies. Its decisions on interest rates can have immense consequences, from the success or failure of the largest companies to the typical homebuyer’s ability to get an affordable loan to the price of cereal at the grocery or gas at the corner station.
Created by Congress in 1913 after a series of bank panics, the Federal Reserve is an independent agency, supposedly outside politics, but its chairman is typically assailed by lawmakers and others when the economy falls and jobless ranks lengthen.
“Bernanke fiddled while our markets burned,” huffed Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, during the debate Thursday. “Ben Bernanke’s Federal Reserve played a key role in setting the stage for the financial crisis.”
Shelby and other opponents blame Bernanke for failing to spot problems leading up to the crisis, for lax bank regulation and for not cracking down on dubious home mortgage practices. All those missteps contributed to the recession, they contend.
Supporters see it far differently, crediting him with preventing the Great Recession from turning into the second Great Depression.
“The chairmanship of Ben Bernanke has in no small measure made it possible for this nation to avoid a catastrophe,” said Senate Banking Committee Sen. Christopher Dodd, D-Conn.
Supporter Chuck Schumer, D-N.Y., worried that the bitter fight over the nomination would send “the message that the Federal Reserve and its monetary policy decisions are under the thumb of Congress. Businesses will be faced with the prospect that the Fed might not be able to do what’s necessary for the economy because of pressure from Congress.”
First appointed by former President George W. Bush and then renominated by President Barack Obama, Bernanke found himself without a broad partisan constituency in the Senate.
“Although the Fed can print money, it can’t print political capital,” said Karen Shaw Petrou, managing partner at Federal Financial Analytics, a consulting firm that advises financial institutions.
UNEMPLOYMENT
Jobless claims surged two weeks ago as state agencies cleared backlogs left from the holiday season. Despite a drop in claims last week of 8,000, employers haven’t stopped layoffs.
GOODS
A slight gain of 0.3 percent in orders for factory goods points to weak manufacturing activity in coming months. A key bellwether comes in today’s report on gross domestic product.
EARNINGS
Ford posted a profit of $2.7 billion for 2009, a dramatic turnaround in one of the worst years in the history of the automotive industry. Janus and Xcel earnings rose in the fourth quarter.
