Washington – Federal Reserve Board Chairman Ben Bernanke’s prospects for a second term became shakier Friday as two Senate Democrats, furious at his stewardship during the nation’s economic crisis, said they’d oppose him.
Both President Barack Obama and Senate Majority Leader Harry Reid renewed their support for Bernanke on Friday, but his performance since becoming chairman in early 2006 has become a rallying point for some lawmakers being bombarded by constituents frustrated about the economy’s sluggish pace of recovery.
The Senate had been expected to act on the nomination this week, but there was no vote.
Reid’s endorsement of Bernanke in a statement late Friday reflected the difficult politics of the confirmation, especially for senators who, like Reid, a Nevada Democrat, face uncertain re-election prospects.
“I made it clear that to merit confirmation, Chairman Bernanke must redouble his efforts to ensure families can access the credit they need to buy or keep their home, send their children to college or start a small business,” Reid said, referring to a meeting he had Thursday with Bernanke.
“My support is not unconditional,” Reid added. “I know Chairman Bernanke is committed to transparency and accountability, and that is why I will hold him to the highest standards of both.”
However, he also credited for Bernanke for helping “steer us away” from a depression. “Conventional wisdom rarely credits those who averted disaster,” the senator said, “but that’s precisely what Chairman Bernanke did.”
Skepticism about Bernanke, however, seemed to be growing on Capitol Hill.
Sen. Barbara Boxer, D-Calif., was among those who said she’d oppose a second term for Bernanke.
“It is time for a change,” she said. “It is time for Main Street to have a champion at the Fed.
“Dr. Bernanke played a lead role in crafting the Bush administration’s economic policies, which led to the current economic crisis. Our next Federal Reserve Chairman must represent a clean break from the failed policies of the past.”
Also coming out against Bernanke Friday was Sen. Russ Feingold, D-Wis.
“Under the watch of Ben Bernanke, the Federal Reserve permitted grossly irresponsible financial activities that led to the worst financial crisis since the Great Depression,” he said.
The possibility that Bernanke might not be confirmed — he previously was thought to be a shoo-in — came as unease spread among the nation’s bankers and investors over Obama’s announcement Thursday that the administration would seek to limit the kinds of investments the nation’s largest banks could make.
For a second day, the Dow Jones Industrial Average lost more than 200 points, dropping nearly 217 points, to end the day 10172.98. The Dow dropped 213 points on Thursday.
How deep the disaffection might be is unclear. Bernanke is thought still to have considerable support from members of both parties.
Boxer’s and Feingold’s statements, however, were more evidence that many senators are increasingly uneasy about a second term for the 56-year-old Fed chairman, a former Princeton University economist who was appointed by President George W. Bush.
Asked if the nomination was in trouble, Senate Democratic Policy Committee Chairman Byron Dorgan, D-N.D., who opposes Bernanke, said “I don’t know.”
More information is needed before the Senate can vote, Dorgan said.
He said he wants to know more about “the consequence of opening the loan window at the Federal Reserve board to investment banks for the first time in history.”
Obama remains firmly committed to Bernanke, White House spokesman Bill Burton said Friday. The president still has “a great deal of confidence” in the chairman and thinks he’s “the best person for the job.”
Bernanke’s term expires on Jan. 31. The nomination was approved last month by the Senate Banking Committee on a 16 to 7 vote.
There remains, however, a lot of grumbling among members of both parties that Bernanke was too often oblivious to the trouble that led to the recession and the financial industry crisis that helped stoke it.
“Dr. Bernanke failed to recognize or remedy the factors that paved the road to this dark and difficult recession. Following our economic collapse, it is also apparent that he has not changed his overall approach to prioritizing Wall Street over American families,” said Sen. Jeff Merkley, D-Oregon, the only Democrat on the committee to oppose the nomination.
The nomination will need 60 votes to clear procedural hurdles, and Democrats now control 60 Senate seats, though that number will drop by one when Sen.-elect Scott Brown, the Republican who won Massachusetts’ special election Tuesday, is sworn into office, probably next month.
At least 10 Democrats are thought to either oppose or are seriously considering voting against Bernanke, meaning the nomination will need substantial Republican support.
It’s hard to gauge how strong that support could be. Four banking committee Republicans backed Bernanke last month, including Sen. Judd Gregg, R-N.H.
Other Republicans, however, have spoken against Bernanke, including South Carolina’s Sen. Jim DeMint, whose objection helped thwart the confirmation of Erroll Southers, Obama’s nominee to head the Transportation Security Administration.