With just 72 hours left before his term ended, the Senate voted 70-30 Thursday to confirm beleagued Federal Reserve Chairman Ben Bernanke to a second, four-year term.
“To vote against confirmation could unnerve investors and exacerbate economic uncertainty in the marketplace, which is exactly what we do not need at this time,” said Sen. Robert Menendez (D-New Jersey). “We need the wisdom of patience. Let us not judge the man or the work prematurely.”
The Senate voted 77-23 to end debate, which lasted more than two hours. Lawmakers were harshly critical of Bernanke’s handling of the financial crisis and said the Federal Reserve failed to heed warning signs that the housing and credit markets were destined to crash.
Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee, said “Bernanke fiddled while our markets burned.”
“The Federal Reserve played a key role in setting the stage for the financial crisis,” he added.
But Senate Banking Committee Chairman Christopher Dodd, who was was the principal author of legislation that bailed out foundering Wall Street banks to the tune of $700 billion, said the Bernanke was caught between a rock and a hard place.
“The chairmanship of Ben Bernanke has in no small measure made it possible for this nation to avoid a catastrophe,” Dodd said.
Dodd recently announced his retirement from the Senate, which was due, in part, to the fact that he fell out of favor with Democratic voters after revelations surfaced that the Connecticut lawmaker received special treatment in his acquisition of a mortgage loan from subprime mortgage company Countrywide Financial, through a program that identified him and others as friends of Countrywide chief executive Angelo Mozilo.
The New York Times reported that Bernanke’s confirmation “came after a week in which top White House officials and Mr. Bernanke himself met with Democratic leaders in the Senate to secure support and it served as an indication that Congress would insist on transparency form a historically secretive institution following its extraordinary interventions in the market since 2008.”
Bernanke was at the center of one of the Federal Reserve’s most controversial moves, the Wall Street Journal noted, just as the financial crisis started to peak:
Deciding which firms to save and which to let fail. Each of those steps, from rescuing American Internation Group Inc. to allowing Lehman Brothers Holdings Inc. to go down, is being scrutinized by lawmakers.
Critics have assailed the Fed for supporting AIG at taxpayers’ expense. The insurer got about $180 billion from the federal government and AIG counterparties, including Goldman Sachs Group Inc. and Societe Generale SA, got $62 billion for tearing up insurance contracts with the embattled insurer.
On Wednesday, Bernanke sent a letter sent to Rep. Darrell Issa (R-California) and said the financial stability of AIG’s major trading partners did not play a role in deciding what institutions should be bailed out. Bernanke added that while he backed the decision to rescue AIG, he “was not directly involved in the negotiations with the counterparties.”