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<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR vAlign=top><TD></TD></TR><TR><TD vAlign=top width=452 colSpan=2>Published December 5, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Bernanke gets tough questions, criticisms
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(Washington)
BEN Bernanke got a glimpse on Thursday of the competing demands he would face in a second term as Federal Reserve chairman during four hours of tough questions with some senators urging him to do more to resuscitate the economy while others pressed him to roll back efforts before they provoke a vicious bout of inflation.
Senate Banking Committee members, who were weighing whether to give him four more years as the nation's top economic policymaker, chided Mr Bernanke, citing the highest unemployment rate in a generation and continuing reluctance of banks to stimulate economic activity by lending to businesses.
At the same time, he drew fire from senators who faulted the Fed's efforts to prop up the economy as ill-conceived and warned the central bank could let inflation return if it doesn't soon reverse its aggressive measures to stimulate growth, such as an ultra-low interest rate policy.
That inherent tension will likely define Mr Bernanke's second term as Fed chairman if, as appeared likely at the hearing, he is confirmed by the full Senate. Mr Bernanke received ample criticism, particularly for the Fed's regulatory failures in the run-up to the financial crisis and its decisions during the bailout of American International Group (AIG).
But the consensus of Senate Banking Committee members was that Mr Bernanke's actions during the crisis helped avert a much worse fate for the economy.
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</TD></TR></TBODY></TABLE>'I strongly support your confirmation,' said Senator Christopher Dodd, chairman of the committee. 'I believe you're the right person at the right time to do this job.' Mr Dodd offered his endorsement even though he has harshly criticised the Fed, including at the hearing.
Senator Bernie Sanders, said on Wednesday that he would place a hold on Mr Bernanke's nomination, a parliamentary manoeuvre that could delay a confirmation vote into next month and make it necessary for the Senate leadership to muster 60 votes in his favour, rather than the usual 51-vote majority. Although Mr Sanders is not on the Banking Committee, another vehement critic, Senator Jim Bunning, is a member and pledged to Mr Bernanke that he would 'do everything I can to stop your nomination and drag out this process as long as I can'.
But the prevailing view on the committee was more sympathetic as Republicans Bob Corker, and Judd Gregg, joined with several Democratic senators in offering Mr Bernanke praise. Mr Bernanke was initially appointed during the Republican administration of George W Bush, and renominated by Democratic President Barack Obama in August.
Mr Bernanke maintained an even tone throughout the session, defending the Fed's - and his own - actions without becoming flustered or argumentative. When Mr Bunning opened with a scathing 1,600-word attack on Mr Bernanke's leadership of the Fed - 'In short, you are the definition of a moral hazard,' Mr Bunning scolded - Mr Bernanke responded with a narrow discussion of how the Fed negotiated with AIG counterparties when it was taking over the firm.
While there was plenty of criticism directed at past Fed actions, the discussion laid bare the challenges facing the central bank in the coming years. Unemployment is 10.2 per cent and climbing, and Fed officials forecast it to remain elevated for years to come. That will intensify pressure on Mr Bernanke to combat the anaemic job market. -- LATWP
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</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Bernanke gets tough questions, criticisms
<TABLE class=storyLinks border=0 cellSpacing=4 cellPadding=1 width=136 align=right><TBODY><TR class=font10><TD width=20 align=right>
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BEN Bernanke got a glimpse on Thursday of the competing demands he would face in a second term as Federal Reserve chairman during four hours of tough questions with some senators urging him to do more to resuscitate the economy while others pressed him to roll back efforts before they provoke a vicious bout of inflation.
Senate Banking Committee members, who were weighing whether to give him four more years as the nation's top economic policymaker, chided Mr Bernanke, citing the highest unemployment rate in a generation and continuing reluctance of banks to stimulate economic activity by lending to businesses.
At the same time, he drew fire from senators who faulted the Fed's efforts to prop up the economy as ill-conceived and warned the central bank could let inflation return if it doesn't soon reverse its aggressive measures to stimulate growth, such as an ultra-low interest rate policy.
That inherent tension will likely define Mr Bernanke's second term as Fed chairman if, as appeared likely at the hearing, he is confirmed by the full Senate. Mr Bernanke received ample criticism, particularly for the Fed's regulatory failures in the run-up to the financial crisis and its decisions during the bailout of American International Group (AIG).
But the consensus of Senate Banking Committee members was that Mr Bernanke's actions during the crisis helped avert a much worse fate for the economy.
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Senator Bernie Sanders, said on Wednesday that he would place a hold on Mr Bernanke's nomination, a parliamentary manoeuvre that could delay a confirmation vote into next month and make it necessary for the Senate leadership to muster 60 votes in his favour, rather than the usual 51-vote majority. Although Mr Sanders is not on the Banking Committee, another vehement critic, Senator Jim Bunning, is a member and pledged to Mr Bernanke that he would 'do everything I can to stop your nomination and drag out this process as long as I can'.
But the prevailing view on the committee was more sympathetic as Republicans Bob Corker, and Judd Gregg, joined with several Democratic senators in offering Mr Bernanke praise. Mr Bernanke was initially appointed during the Republican administration of George W Bush, and renominated by Democratic President Barack Obama in August.
Mr Bernanke maintained an even tone throughout the session, defending the Fed's - and his own - actions without becoming flustered or argumentative. When Mr Bunning opened with a scathing 1,600-word attack on Mr Bernanke's leadership of the Fed - 'In short, you are the definition of a moral hazard,' Mr Bunning scolded - Mr Bernanke responded with a narrow discussion of how the Fed negotiated with AIG counterparties when it was taking over the firm.
While there was plenty of criticism directed at past Fed actions, the discussion laid bare the challenges facing the central bank in the coming years. Unemployment is 10.2 per cent and climbing, and Fed officials forecast it to remain elevated for years to come. That will intensify pressure on Mr Bernanke to combat the anaemic job market. -- LATWP
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