Bernanke Should be Re-Appointed

A vote on the future of the Federal Reserve chief is due to be held this week. It's unclear whether or not Ben Bernanke, the current Fed chairman, will be re-appointed. I think it would be a disaster if he wasn't given a second term.

This week is expected to reveal whether or not Federal Reserve Chairman Ben Bernanke will be re-appointed. Word out of congress is that a vote may take place before the end of the week to determine the future of the Fed, as well as the American economy.

It’s not all been plain sailing for Bernanke. After coming through what was no doubt one of the toughest economic crises any central banker in the world has faced, there remains a lot of popular resentment toward anything Wall Street. Bernanke and his “co-conspirator” Tim Geithner are seen as having aided financial institutions ahead of those on Main Street.

Such rhetoric, I believe, is both ignorant and biased. It’s unfair to lump Bernanke (as well as Hank Paulson, the former Fed chief) as a proponent of Wall Street. Bernanke has done a magnificent job in saving this economy from a much worse fate. Given the situation he inherited, Bernanke and company should be heralded as heroes for preventing The Great Depression II, and rather limiting the extent of economic damage to just The Great Recession.

There is no way, in my opinion, that alternate measures could have been taken that would have resulted in lower unemployment and higher GDP growth than we are currently seeing. I say this in somewhat of a cocoon and specifically regarding Bernanke. Former Fed boss Greenspan requires an alternate and differing write-up.

As to why any Senator in his right mind would not want Bernanke in charge of the Fed for the next term baffles me. It would be a terrible mistake to remove him at this pivotal point, when we are most certainly not out of the woods regardless of what anyone says. However for some bizarre reason (bizarre is equivalent to mid-term electioneering in my book), political commentators have been sitting on the fence over the future of the Fed. I sample some of their thoughts, courtesy CNBC, below:

“He has amplified risk in the system and all that came crashing down last year. And I don’t think the person you want to rebuild your house is the person who helped set it on fire.” - Sen. Jeff Merkley, D-Ore.

“We were on the verge of a cataclysmic event in late 2008. And it didn’t look good for us as a country. We were headed to what probably was going to be a massive financial meltdown in all our institutions… You’re talking about something that could have been on a depression type of level. And it didn’t happen. Why didn’t it happen? It didn’t happen because the chairman of the Fed along with the Treasury secretaries, both Paulson and Geithner stepped in and did some really original things. And sure they pushed the envelope, but if they hadn’t pushed the envelope, the disaster which would have occurred would have been cataclysmic.” – Sen. Judd Gregg, R-N.H.

“I don’t think Bernanke should be reappointed. But even if he is, he’s wounded; the attention is on the Fed; the economy is going down and the correction has not occurred.” - Rep. Ron Paul, R-Texas

“I sure do hope they reappoint Bernanke. I had the occasion to work with him through the rescue period. And I found that he was incredible. That’s not to say that everything he’s done through his tenure at the Federal Reserve both as chairman or as governor is what we would have liked but we never get 100 percent performance from anyone. I just think that he’s extremely able. That he’s got an ability to take crises and manage it well at critical times.” - Rep. Paul Kanjorski, D-Penn.

I am the first to understand that political badgering and the pursuit of the median voter is the ultimate priority for any political party. However I cannot understand why there is a notion that anyone can come in at this point in time, take over from Bernanke, and magically increase GDP and lower unemployment. It’s just not going to happen. The priority now should be the protection of the US economy from a double dip recession and there’s no better man to lead that charge right now, than Ben Shalom Bernanke.

 

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