Bernanke Approval Not Certain

Bernanke- Once Time's Man Of The Year, Now Questionable In His Bid For ReconfirmationWhat once looked like a sure thing is teetering in its certainty- much like the economic stability Bernake oversaw when he took the job from Greenspan in 2006.

"Bernanke presided over the biggest Wall Street bailout in history, making trillions of dollars in loans to big banks with no oversight. But after taking extreme measures to save the banks, Bernanke has shown no interest in helping regular folks who can't find jobs, even though ensuring 'full employment' is explicitly part of his mandate,” said MoveOn.org, clearly upset for the middle and lower classes.

The stats are telling: According to a Reuters poll, 38 senators are committed to or leaning toward approval. 17 are outright opposed or inclined that way (including, notably, Senator John McCain).

Bernake’s tenure has brought about some serious political hemming and hawing- yes I said it. The House recently approved giving Congress the power to audit the Fed’s interest rate decisions and the Senate is debating whether to take away their authority to regulate. Are those decisions Bernake’s fault? Probably not- it is his policies that helped guide the nation’s finances to where they are right now, but he didn’t preside over the early 2000’s when things were coming off the hinges and no one could see it. He just showed up as it was collapsing and has had to deal with everything as it disintegrates. I read an op-ed in the New York Times today from Paul Krugman who said that he would be in favor of Bernake’s approval only because it was better than the risk of approving someone new. That’s not a ringing endorsement but he does have a strong point- the economy and the financial world are somewhat stable right now. A new person will rock the boat, whether they are good or not so good. A rocking boat in a storm could be a rough blow for the economy to take. And what’s more, there would be a lengthy amount of time when the new person would be going through the approval process, all of which would be limbo for Wall Street and for investors. Of course, it is never a good time for there to be uncertainty around market conditions, but right now is a bad time during a bad time.

But do we really want more of the same? Krugman pointed out that Bernake is largely a status quo kind of guy and that he doesn’t look ready to really do much different on the financial regulation of the banks. With stock prices back up and no real reason in sight (other than the government making a bunch of money and passing it out), do we want more of the same? Will it just give us… more of the same? Meaning, another bubble pop? What do we do then?

Bernake’s biggest asset to investors may be his proclivity to keep interest rates low until the economy is strong again, which may be a long time at the pace it’s going right now. Investors like low interest rates that they can count on.

It appears he will make it through the confirmation process, with Obama’s blessing, and the dissention in the ranks may well be the latest sign in wavering support for the Obama administration in general.

 Photo Credit: Paul RA (via Flickr under CCL)