Bernanke Is In The Hot Seat While Obama Is Primed To Pick Several Fed Board Seats
How long will Ben Bernanke last as the Chairman of the Federal Reserve? Well, it depends on who you ask. Bernanke is scheduled to defend his record in front of the House of Representatives this week, Bloomberg reports. Lawmakers will certainly have questions about whether or not Bernanke forced Bank Of America CEO Ken Lewis to acquire Merrill Lynch during the height of the economic crisis last fall.
But Bernanke isn't the only opening on the Fed's five-person Board of Governors, a key body that determines oversight of banks and interest rates. In June of next year, vice chairman Donald L. Kohn's term will expire, while in August 2012 Elizabeth A. Duke's term is set to end. (Fed governors serve 14-year terms and cannot be reappointed). Considering that Obama has already appointed Daniel K. Tarullo to the Board while still president-elect, the President has a critical opportunity to name three of the five decision-makers of the country's economic policy.
Bernanke's term as Fed chairman expires on January 31, and the next few months will be crucial for his legacy. Lawmakers like Chris Dodd and Barney Frank, have already expressed concern over the Fed's super-sized under President's proposed overhaul of the financial system. (This may be why, at least in part, the Fed recently hired a former Enron lobbyist to improve its image on Capitol HIll).
Though he has not indicated that he's looking to make a change, perhaps more so than any government agency, the Federal Reserve is crucial to the President's aims. In December, the Washington Post focused on the President's unusually strong influence on the makeup of the Fed:
"...within 18 months of taking office, Obama will likely have appointed five of the seven Fed governors. The central bank is designed to be independent from politics, so a president's best chance of influencing how the Fed will regulate banks or respond to economic changes is through these appointments."
Who might take Bernanke's place next year? Both the Washington Post and Bloomberg indicate that the leading candidate is Lawrence Summers, former Treasury Secretary under President Clinton.
The odds of Bernanke's reappointment, however, are less clear. Earlier this month, CNBC asked a few Fed watchers and they divided on how long Bernanke would last. CNBC suggested that Bernanke may fall victim to politics:
"Bernanke is thought to be a Republican, which doesn't enhance his chances of getting the nod from a Democratic president. That idea may have been partly supported by the fact that Obama went months without even acknowledging the Fed boss by name, never mind commenting on his performance."
Intrade, the online trading market , suggests Bernanke chances may be fading. Intrade puts the chances of a Bernanke reappointment at 65 percent, down from 75 percent earlier this month.
Get HuffPost Business On Facebook and Twitter!
Loading comments…
The Huffington Post | Ryan McCarthy
First Posted: 06-23-09 01:14 PM | Updated: 06-23-09 04:35 PM