Bernanke's re-nomination boosts confidence
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Controversy remains
Although Bernanke has won the vote of confidence, he is not free of controversy. Criticism from Capitol Hill should in no way be ignored.Some critics say Bernanke was too slow to recognize the severity of the crisis and failed to prevent the worst crisis and recession in generations.
They said that Bernanke failed to detect the risks caused by the housing and credit bubble earlier in the decade.
In his first year as chairman, and in jobs before that in the Bush administration and as a Fed governor, he did little to raise alarm bells or draw attention to what we now know as an irrationally enormous housing bubble and the deep fragility in the financial system and regulatory system that relied on self-policing markets.
Others worry the Fed's measure to flood the financial system with too much money could cause inflation later.
Also, critics argue that Bernanke is part of the past. He has been deeply involved in every step of the crisis. He is therefore as tied to the mistakes of the past as he is to the successes.
Simon Johnson, former chief economist with the International Monetary Fund, now a professor at the Massachusetts Institute of Technology's Sloan School of Management, said "I don't have a better candidate in mind, but I'm worried Bernanke has the same two big weaknesses that Greenspan had: keeping interest rates too low and being super-pro-finance."
"Greenspan's philosophy was that you don't have to worry about spotting bubbles; you can just clean up after them. Bernanke hasn't said anything different," said Johnson.
Challenges ahead
If the Senate confirms the renomination, Bernanke would serve asecond four-year term after his current one ends on Jan. 31.
Now, how to boost the economy on the track of stable and sustainable recovery becomes the focus of his job among other challenges.
"If confirmed by the Senate, I will work to the utmost of my abilities -- with my colleagues at the Federal Reserve and alongside the Congress and the administration -- to help provide a solid foundation for growth and prosperity in an environment of price stability," Bernanke said.
Obama is counting on Bernanke to nurse the economy back to health at a time when unemployment, home foreclosures and bank failures are still mounting.
Bernanke would, in his second term, begin the difficult task of unwinding the Fed's extensive interventions in the economy.
"We have been bold or deliberate as circumstances demanded, but our objective remains constant: to restore a more stable economic and financial environment in which opportunity can again flourish, and in which Americans' hard work and creativity can receive their proper rewards," Bernanke said.
Also, Bernanke has to keep a delicate balance among other economic powers from the government.
As the US government is promoting a financial regulation overhaul led by the Department of Treasury, a proposal to establish an independent Consumer Financial Protection Agency has become a focus of argument, in which the Fed claimed that keeping the agency was part of its responsibility.
Meanwhile, Christopher Dodd said "I still have serious concerns about the Federal Reserve's failure to protect consumers, and I strongly believe these responsibilities should go to an independent consumer financial protection agency."
Despite the pros and cons, the market welcomed Bernanke's reappointment. US stock index futures were higher Tuesday on the news.
Analysts say now investors around the world are more focused onwhether a global economic recovery is really underway.
(Xinhua News Agency August 26, 2009)
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