Friday, January 22, 2010

Opposition to Bernanke begins to snowball

HuffPo -

Martha Coakley and the Democratic supermajority in the Senate may not be the only casualties of the Massachusetts special election upset on Tuesday that sent Scott Brown to Washington.

Federal Reserve Chairman Ben Bernanke was originally scheduled for a vote on his confirmation Friday and was assumed to have the votes.

But on Wednesday, Sen. Bernie Sanders (I-Vt.), a Bernanke opponent, said that opposition was growing against his re-confirmation.

And on Thursday Jim Manley, senior communications adviser to Senate Majority Leader Harry Reid (D-Nev.), said that the vote had not been firmly locked in and won't take place this week. A spokeswoman for the Federal Reserve referred questions to the Senate.

Reading too much into the delay could overstate its immediate significance -- the Senate has a lot on its mind, after all -- but the populist rage against Wall Street now casts a once-secure confirmation in some doubt.

The election in Massachusetts has senators who previously considered themselves safe watching their backs, and they don't relish the prospect of a vote in favor of a man who failed to foresee the financial crisis and is closely associated with Wall Street.

A recent poll found that 47 percent of Americans think Bernanke cares more about Wall Street than Main Street, while only 20 percent think he works for Main Street. Independents, who swung heavily for Brown in Massachusetts, are even more opposed to Bernanke than Democrats or Republicans. Fifty percent of independents think he cares first about Wall Street; 15 percent think he prioritizes the needs of Main Street. That's a difficult vote in the face of an angry public.

If Bernanke is confirmed, he'll have to rely on the same coalition that moved the bailout through Congress, when the leadership of both parties joined forces to oppose the rank and file.

The combined leadership of the two major parties may still be able to push Bernanke's confirmation through, but Sanders said he sees a growing movement in a new direction.

"I sense that many Democrats see the Massachusetts election as a wake-up call," Sanders said. "There is a growing understanding that our economy is in severe distress, a greater appreciation that people are disgusted with the never-ending greed on Wall Street, and a better recognition that we need a new direction at the Fed."

Sanders said that Bernanke's record doesn't warrant a new term. The Federal Reserve has four main responsibilities: to maximum employment and prevent inflation; to keep the financial system from imploding; to maintain the safety and soundness of financial institutions; and to protect consumers against deceptive and unfair financial products.

Bernanke has gotten high marks in general for his response to the crisis, but has refused to say what institutions the Fed has provided money to. Unemployment remains high -- it has doubled during Bernanke's term -- and the Fed failed to do any consumer protection. The system imploded on his watch and nearly brought down the global economy. More than 140 banks, including major financial institutions, have collapsed during his tenure.

"People do not want another term for the man whose major job as Fed chairman was to protect the safety and soundness of our financial system but instead was asleep at the switch," Sanders said. "I am confident that more and more senators understand that we need a new Fed and a new Wall Street and will oppose Bernanke's confirmation."

Bernanke's term expires on January 31.

UPDATE -- JANUARY 22, 5:32 PM ET: A spokesman for Sen. Dick Durbin of Illinois said that the second ranking Democrat in the Senate, and the man in charge of whipping votes, is now undecided as to how he'll vote on Bernanke's confirmation.
UPDATE -- JANUARY 22, 3:11 PM ET: Senate Majority Leader Harry Reid, recognizing that his caucus alone won't supply the needed votes to reconfirm Ben Bernanke as Fed Chair, has asked Republican Leader Mitch McConnell (R-Ky.) to count how many votes Bernanke has on the GOP side, McConnell spokesman Don Stewart tells HuffPost.
[...]UPDATE -- JANUARY 22, 2:37 PM ET: Senate Majority Leader Harry Reid (D-Nev.) has not yet decided if he'll vote to reconfirm Federal Reserve Chairman Ben Bernanke on the Senate floor, spokesman Jim Manley told HuffPost Friday afternoon.
UPDATE -- JANUARY 22, 11:23 AM ET: California Democrat Barbara Boxer has become the latest senator to oppose the nomination of Ben Bernanke to a second term as Chairman of the Federal Reserve.

Boxer's opposition, which she announced in an exclusive statement to the Huffington Post, is a blow to Bernanke. Boxer is no firebreather on economic issues, but considered a more mainstream Democrat from a state that was considered comfortably blue -- until Tuesday's special election in Massachusetts, that is.

"I have a lot of respect for Federal Reserve Chairman Ben Bernanke. When the financial crisis hit in late 2008, he took some important steps to prevent what many economists believe could have been an even greater economic catastrophe," said Boxer.

"However, it is time for a change -- 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."
UPDATE -- JANUARY 22, 9:40 AM ET: More sharks are circling around Ben Bernanke's nomination for a second term as chair of the Federal Reserve.

On Friday morning, yet another Senator -- Russ Feingold (D-Wisc.) -- announced that he will vote 'nay' on confirmation.

"A chief responsibility of the Chairman of the Federal Reserve is to ensure a sound financial system," read a statement issued from the Wisconsin Democrats office. "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. Under Chairman Bernanke's watch predatory mortgage lending flourished, and 'too big to fail' financial giants were permitted to engage in activities that put our nation's economy at risk. And as it responds to the crisis it helped to usher in, the Federal Reserve under Chairman Bernanke's leadership continues to resist appropriate efforts to review that response, how taxpayers' money was being used, and whether it acted appropriately. When the full Senate considers his nomination, I will vote against another term for Chairman Bernanke."

Bernanke's term as chairman expires on January 31, and as of now, Senate Democratic leadership isn't sure if they have the votes to get him back into that post. Opposition to his confirmation has been driven by a strange-bedfellows coalition of progressives and movement conservatives -- most of whom blame Bernanke for missing the looming financial crisis or are highly skeptical of the Fed.