McCain to oppose Bernanke confirmation - East Valley Tribune: East Valley Local News

McCain to oppose Bernanke confirmation

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Posted: Monday, January 25, 2010 12:10 pm | Updated: 3:57 am, Sat Oct 8, 2011.

WASHINGTON — Support for Federal Reserve Chairman Ben Bernanke's confirmation for a second four-year term mounted Monday as the White House appeared to stanch opposition that had roiled the financial markets.

Senate Majority Leader Harry Reid, D-Nev., expects a vote by the end of the week, his spokesman said Monday. And David Axelrod, a top adviser to President Barack Obama, said Bernanke has the votes to keep his job.

The stock market, which had skidded late last week, was recovering Monday as Bernanke's prospects brightened.

Sen. Joseph Lieberman, a Connecticut independent, joined Democratic Sens. Max Baucus of Montana, chairman of the Senate Finance Committee, and Dianne Feinstein of California in announcing support for Bernanke's reappointment.

"Facing circumstances not seen since the Great Depression, he made a number of critical decisions that brought us back from the brink of economic disaster," Baucus said.

Bipartisan opposition had been fueled by growing public anger over the economy in general and over bank bailouts in particular. Bernanke, working with the Bush administration and then with President Barack Obama, has expanded the Fed's balance sheet to help banks through the crisis, which peaked in the fall of 2008.

Sen. John McCain, R-Ariz., who had indicated he was leaning against Bernanke, formally announced his opposition to the Fed chairman on Monday.

"Our country is still facing an economic crisis and while I appreciate the service that Chairman Bernanke has performed as Federal Reserve Chairman, I believe that he must be held accountable for many of the decisions that contributed to our financial meltdown," McCain said in a statement released by his office.

But the momentum was moving in Bernanke's favor.

"To blame one man for the financial implosion is simply wrong," Feinstein said. "Ben Bernanke has been helpful to the recovery and, for reasons of stability and continuity, should be reconfirmed."

Also Monday, the liberal MoveOn.org activist group urged senators in an e-mail to vote against Bernanke.

His defeat would rattle Wall Street and financial markets around the world and add new risks to the fledgling recovery. Economists fear that prolonged political wrangling over a successor could increase the odds the economy will falter and dip back down into recession.

White House officials and Democratic and Republican leaders in the Senate had voiced optimism over the weekend that Bernanke would be confirmed.

Obama spokesman Robert Gibbs on Monday called Bernanke's post "an extremely important appointment" that shouldn't be subject to "political games."

"Chairman Bernanke helped the president and the economic team steer through some very turbulent times in rough waters," Gibbs told reporters during his daily briefing.

Lieberman, the 2000 Democratic vice presidential candidate, is one of two independents who caucus with Democrats. The other, Bernie Sanders of Vermont, is leading the effort to defeat Bernanke. Several Republicans and Democrats have announced they would vote against him.

Bernanke's term expires Jan. 31, and the turmoil over his reappointment comes as he and his Fed colleagues begin a two-day meeting Tuesday to gauge the strength of the economic recovery and weigh efforts to wean banks from emergency lending programs.

The Fed is all but certain to keep its key bank lending rate — which affects a wide range of rates on consumer loans — at a record low near zero when the meeting concludes on Wednesday.

It is also expected to renew a pledge to hold rates at record lows for an "extended period" to nurture the recovery. Economists think that means rates will stay where they are for at least another six months.

With the worst of the financial crisis well past, however, the Fed may bump up the rate it charges banks for emergency loans. That rate is only 0.50 percent. Banks can more easily get loans from private sources now that credit markets are healing, although they aren't back to normal. Such a move wouldn't affect interest rates charged to consumers and businesses, but it would mark a step by the Fed to move policies a bit closer to normal.

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