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Fed Chairman Ben Bernanke Likely to Keep His Job
Federal Reserve chairman and Great Depression scholar Ben Bernanke will stay in his job for another four years if President Barack Obama gets his way. There likely will be some contentious moments during the reconfirmation hearings as Senators grill him about bailing out Wall Street institutions deemed too big to fail. He is expected to stay on.
Former Fed governor Randall Kroszner, who resigned his post to return to the University of Chicago, believes that the president has made the right choice and that Bernanke’s “amazing and steady” leadership rescued the nation from a second Great Depression. Mark Calabria, a policy scholar at the libertarian Cato Institute, disagrees and opines that Bernanke’s renomination “sends the worst possible message”. Still, most experts think that retaining Bernanke is a smart move, especially now that the economy and financial markets are stabilizing. “Love him or hate him, there’s strength in continuity,” says money manager Douglas Nardi of Legg Mason Investment Counsel. “Things are going pretty well, and you don’t want to rock the boat.”
Bernanke faces some rough months ahead. He will have to start pulling money out of the system that he flooded with cash last fall. This is a judgment call full of political peril, because it could mean slowing economic growth to control inflation – even if unemployment is still hovering around the 10 percent mark. In Kroszner’s opinion, Bernanke is significantly farther along in this process than the general public realizes. The Fed provided approximately $1.5 trillion in short-term loans as of the end of last year, which helped keep swaps, commercial paper and other institutional markets from shutting down completely.