U.S. Senate Democratic leaders on Tuesday pressed to round up support for Ben Bernanke, aiming for a vote as early as Thursday to confirm him for a second term as chairman of the Federal Reserve.
Bernanke appears as if he will survive the shockwaves that when through the Democratic party when an underdog Republican won a stunning upset in a Massachusetts Senate race last week largely because of voter anger about the economy.
Bernanke was in jeopardy of becoming the fall guy but a push by the White House and Senate allies was slowly coaxing undecided senators into voicing support.
A Reuters poll found 42 senators have said they are likely to support Bernanke, with 18 opposing him. Senate Democratic leader Harry Reid said a vote could come on Thursday or Friday.
Bernanke, whose four-year term as Fed chief expires on Sunday, will have to attract 60 votes to overcome efforts by some lawmakers to block the nomination. If he clears that procedural hurdle, a simple majority of 51 could confirm him.
"We are confident that we will have the votes when it comes time to confirm Bernanke," a Democratic aide said.
If the Senate fails to act in time, Fed Vice Chairman Donald Kohn appears poised to take over leadership of the central bank on an acting basis.
Bernanke's confirmation had seemed assured until the Massachusetts election reshaped the political calculus.
Public ire at the financial bailouts the Fed helped lead at a time the U.S. unemployment rate is stuck in double digits has made a potent political brew for senators facing re-election in November and has undercut support for Bernanke.
While the Fed chairman, who was first named to the post by President George W. Bush, has been credited with capably steering the U.S. economy through the worst financial storm in decades, he is under fire for the Fed's hands-off regulatory and easy money policies that preceded the meltdown.
"Politicians are casting around for a bogeyman that they can point a finger at," said Stephen Stanley, chief economist at RBS Securities in Stamford, Connecticut. "The timing of Bernanke's reappointment vote could not have come at a worse time."
A senior Fed official warned that Bernanke's rocky path to confirmation suggests a worrisome attempt to exert political influence over the decisions of the central bank.
"The impulse to use Mr. Bernanke as a political punching bag raises the specter that, instead of doing the right thing, Congress may seek to pressure the Fed to print its way out of this crisis," Dallas Federal Reserve Bank President Richard Fisher wrote in the Wall Street Journal.
Fisher said if the Fed were to succumb to pressure to print more money than economically wise, inflation would ensue.
Bernanke became a Fed board member in 2002 and later served as a White House economic adviser before Bush tapped him to head the central bank as chairman. President Barack Obama selected him for a second term in August, praising him for his efforts to buffer the economy from the financial crisis.
The Fed's policy-setting panel is scheduled to start a two-day meeting on Tuesday. It is widely expected to hold interest rates steady near zero and renew its pledge to keep rates exceptionally low for an extended period.
While the Fed is not expected to raise rates until 2011, it is likely to face calls to keep them down as long as possible to boost employment.
© 2022 Thomson/Reuters. All rights reserved.