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Wednesday 21 February 2018

Bernanke survives Senate protest vote

Second term: Fed chief Ben Bernanke. Photo: Getty Images
Second term: Fed chief Ben Bernanke. Photo: Getty Images

Stephen Foley in New York

Ben Bernanke won confirmation to a second term in charge of the Federal Reserve, but not before the US Senate registered the biggest protest vote against a central bank chairman in its history.

Amidst dire warnings from Mr Bernanke's supporters that lawmakers risked undermining market confidence in American monetary policy, the Senate voted 70 to 30 to approve his nomination.

What had once appeared an uncontroversial nomination by the President Barack Obama turned into a political firestorm amidst public anger at the economic crisis and the bailout of Wall Street.

The first, Mr Bernanke was accused of failing the prevent, the second he was accused of mishandling to the detriment of taxpayers.

Signs that Mr Bernanke's support was crumbling in the wake of the anti-establishment vote in the Massachusetts senatorial election last week prompted frantic arm-twisting by the White House over the weekend, and Mr Bernanke himself took time out from a two-day monetary policy meeting to lobby politicians.

Charles Schumer, a New York Democrat, warned that the bitter fight over the nomination would send "the message that the Federal Reserve and its monetary policy decisions are under the thumb of Congress.

Businesses will be faced with the prospect that the Fed might not be able to do what's necessary for the economy because of pressure from Congress."

Chris Dodd, the chairman of the Senate banking committee, said Mr Bernanke had earned a second term because his actions saved the financial system from catastrophe during the panic of 2008.

But those actions, including the injection of hundreds of billions of dollars into the credit markets and use of funds from the $700bn (€500bn) taxpayer bailout of Wall Street, have come under intense scrutiny from Congress. "A vote for Ben Bernanke is a vote for bailouts," said Jim Bunning, a Republican Senator and long-time critic.

The 30pc "no" vote was the highest against any presidential nomination for the chairmanship of the country's central bank. Paul Volcker, a Jimmy Carter appointment who was renominated by Ronald Reagan in the early Eighties, recorded 17 votes against him, the previous record.

After the vote, the Treasury Secretary Timothy Geithner said: "The Senate did the right thing. Chairman Bernanke will continue to play a vitally important role in guiding the nation's economy."

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