Obama Reappoints Bernanke As Fed Chief

OAK BLUFFS, Mass. — President Barack Obama announced Tuesday he wants to keep Ben Bernanke on as Fed chairman, saying he shepherded America through the worst economic crisis since the Great Depression.

"Ben approached a financial system on the verge of collapse with calm and wisdom; with bold action and out-of-the-box thinking that has helped put the brakes on our economic freefall," said Obama, with Bernanke standing by his side. "Almost none of the decisions he or any of us made have been easy."

Obama made the announcement while on vacation on the island of Martha's Vineyard off the coast of Massachusetts after aides said initially that the president intended a news-free week there. Both he and Bernanke sported the open-collar look.

Bernanke, 55, is credited with turning the economy away from its deepest and longest recession since the 1930s. Now he faces the challenge of meeting White House expectations to chart the full economic recovery considered critical to Obama's legacy.

In sticking with a Republican for the nation's top banker, the Democratic president was aiming for stability at a time of continuing, though easing, crisis. The move was designed to reassure the U.S. financial sector as well as foreign central banks that the Obama administration isn't changing course on its largely well-received approaches to the financial meltdown and overall monetary policy.

The announcement also came nearly concurrently with a piece of bad economic news. Obama interrupted his vacation to telegraph his decision just ahead of a White House report that gave more bleak assessments of the nation's deficit picture.

Figures released by the White House budget office on Monday foresee a cumulative $9 trillion deficit from 2010-2019, $2 trillion more than the administration estimated in May. Moreover, the figures show the public debt doubling by 2019 and reaching three quarters the size of the entire national economy. Also Monday, analysts with the nonpartisan Congressional Budget Office projected a cumulative $7 trillion deficit from 2010-2019, more in line with the administration's May estimate.

The White House said Obama decided on the last-minute schedule addition to help "put him more in `vacation mode." "There's been a lot of speculation out there, and the president wanted to put it to rest," Deputy Press Secretary Bill Burton told reporters as the presidential entourage headed from the site of the announcement to a golf course.

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Bernanke's early tenure was as complicated as the crisis facing the banks he sought to save.

The Fed chairman's successful, although unconventional, strategy to move the economy away from recession, unlock frozen credit and stabilize spiraling financial markets depended in large part on creating radical and unprecedented lending programs. But he's not without his detractors, and the Democratic chairman of the Senate Banking Committee, Connecticut's Chris Dodd, immediately warned of a thorough hearing before Bernanke would be confirmed for a second four-year term.

With such controversy surrounding some of his decisions, Bernanke's fate had been the subject of speculation for months.

Many on Wall Street and in academic circles had viewed Bernanke as the best choice to tackle continued high unemployment, fight off any threat of inflation and take on the next set of risky, difficult decisions.

Announcing his decision to bypass prominent Democratic economic figures for the job, Obama had nothing but praise for Bernanke.

The president also put in a plug for his own administration's actions to stabilize the financial system, restructure the auto industry and approve $787 billion in stimulus spending.

Appearing in makeshift press workspace on the island, Bernanke said that if confirmed by the Senate, he'd work to provide "a strong foundation for growth and stability" in the economy.

"The Federal Reserve, like other economic policy makers, has been challenged by the unprecedented events of the past few years," Bernanke said. "We have been bold or deliberate as circumstances demanded, but our objective remains constant: to restore a more stable financial and economic environment in which opportunity can again flourish and in which Americans hard work and creativity can receive their proper rewards."

The economy is emerging from recession and is poised for growth. However, it will be slow-going and the unemployment rate, now at 9.4 percent, is likely to top 10 percent this year before it starts going down.

For Obama, there was little political downside in choosing to nominate Bernanke. The move displays bipartisanship and a steady, unchanging hand on the economic tiller. Fully occupied with an attempted health care overhaul, Obama's team could little afford the distraction of changing the head of the Fed.

Bernanke was appointed Fed chairman by President George W. Bush and sworn in Feb. 1, 2006, following Alan Greenspan's 18-year tenure.

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Associated Press writers Jim Kuhnhenn in Washington, Jeannine Aversa in Jackson Hole, Wyo., and Glen Johnson and Jason Bronis in Oak Bluffs, Mass., contributed to this report.

Comments

[JimInNevada]

Given the high unemployment rate and the continuing stress on Main Street, let us hope the Bernanke re-appointment does not become Obama's "mission accomplished" moment.

[nosodog]

What is Obama thinking?

[indy100]

"For Obama, there was little political downside in choosing to nominate Bernanke. The move displays bipartisanship and a steady, unchanging hand on the economic tiller." Are you kidding here? Attempts at bipartisanship and an unchanging hand are exactly what's killing this economy, as well as Obama's presidency!!

I'm starting to think Barack Obama is no different than George Bush and has surrounded himself with people who just keep telling him what a great job he's doing. Mr. President, THEY'RE LYING TO YOU.

[HarryHamil]

Terrible choice.
Bernanke has been running for re-election ever since he was appointed.
The changing of the inception of the Fed's chair's term to the first year of a President's term was a terrible move because it politicized the position tremendously.

[ElsaIndy]

Bernanke is being re-appointed because to do otherwise would indicate a loss of confidence. However it is appalling that Obama would re-appoint this fellow who helped to bring on this mess. Shame on them both.

[sonofsamphm1c]

It's been obvious for months, which is why I started saying it months ago, that Bernanke would be reappointed.

Keep your eye on the ball. It's a fast game.

[miksmaster]

Nice move! Reappoint Ben Bernanke. A lot of imagination must have gone into this decision. This is the change we voted for? Why not get Bernie Madoff out of jail and let him help Ben. Together, they could bring Wall Street to it's knees. The dynamic duo, the caped crusaders, fighting for the American People. Maybe we can get Alberto Gonzalez to replace Eric Holder. Old Gonzo would really be tough on these "torture" guys, don't you think? Why stop there? Lets send Joe Biden packing and re-hire Dick Cheney as V.P. Now that would be change! I don't mean it. I'm sorry. I'm angry. I'm going to bed.

[indy100]

Hey I'm with you!

[ohiomark]

Ben Bernanke, one of the people responsible for the collapse of the dollar gets rewarded.

I guess Obama DOES want the economy to totally collapse. It's the best way for him to grab more power.

Where is the story about how the White House completely under estimated the ten year deficit?

It was 7 TRILLION, now it's 9 TRILLION!!!

This same group of i d i o t s want to run our healthcare?

[blueskybigstar]

The house and the senate run legislation. The problem was that, because of compromise with Republicans, he did not raise the taxes he needed to in order to keep the money in the economy, recycled savings so to speak, which would have kept money from going out the window to China. Another problem was that to appease Republicans, who caused this mess, he had to act fast in order to keep things operating as normal, and taking on the corporate forces to enact regulation would have delayed the bills that were so needed at the time or things would have gotten worse. I agree, I don't like a lot of the things that are going on, but look at medicare. It has a higher approval rating than almost any insurance plan and costs less and it is single payer. Why can't everybody have medicare?

What Obama could be doing is devaluing the dollar in order to pay back the Chinese easier. He could declare that all dollars that are in the country are now worth ten times all dollars outside of the country. If he is not somehow being controlled against his will or with his will and he is a good person, then he needs to deal with the shadow government here first. I really don't know what to think anymore.

[ThePeacemakers]

Alot of people don't have dollars or the dollars that they used to, but it's not at the moment "collapsed". Depends of what you mean by "the collapse"?

[billw8017]

Clinton re appointed Greenspan, Bush I 's choice, and stuck by him, and wooed him and got betrayed by him when that Republican raised the overnight to 6 3/4% in the summer of 2000, engineering the economic slide of the fall and setting up the election of Bush II. This interpretation might be less convincing had there been any apparent inflation in the final Clinton years and if Greenspan had not dropped the overnight to 1% to make the Bush tax cuts look better.

So ... What am I saying? That Bush Republican Bernanke will betray Obama and plunge the country back into recession just to defeat the Democrats at election time? We have to watch how things work out. The President's greatest successes have been Nancy Pelosi initiatives (raising the minimum wage, S Chip, fair wages for women). Harry Reid has backed her up despite that Senate initiatives have been more reactionary. The administration's monetary policies have not relieved unemployment, but this talk of the recession being over sounds like some 1937 style budget balancing to me.

[RavenRant]

From http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm#3:

"What are the Federal Reserve's responsibilities?

Today, the Federal Reserve's responsibilities fall into four general areas:

conducting the nation's monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices

supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers

maintaining the stability of the financial system and containing systemic risk that may arise in financial markets

providing certain financial services to the U.S. government, to the public, to financial institutions, and to foreign official institutions, including playing a major role in operating the nation's payments systems"

Um, full employment? Stable prices? Supervising and regulating banking institutions? Maintaining stability? Containing risk?

Bernanke has failed massively in every one of these responsibilities, but because the stock market is up slightly from the catastrophic drops over which he presided, we ignore his dereliction of duty?

[HypocriticalSpamazon]

When the DOW was at 6500, it was front page news at HP and people here were demanding Geithner and Summers be fired because their policies were destroying savings and 401Ks.

Now that the DOW is recovering, it suddenly doesn't matter any more.

[RavenRant]

The damage inflicted to the rest of the economy by the financial sector is NOT being repaired by a short term rise in the stock market. Many former investors are out of the market now because their savings and discretionary income have been wiped out.

Pension funds have been wiped out.

State and city budgets have been wiped out. Essential services to the neediest people, including infants and children, have been cut or eliminated.

Not to mention the businesses large and small that are collapsing from the credit crunch, and the resulting explosive unemployment.

Not to mention the public dollars that were siphoned off into the financial sector that are no longer available for other essential purposes.

Worst of all, the structural causes of the crisis within the financial sector, unregulated securities, pervasive fraud and excessive risk, have not been addressed.

But the wealthiest have their bonuses, dividends and slush funds back, so the struggling workers and would-be workers of America can take comfort in that, while we wait for the other shoe to drop.

And, finally, see the above post for a description of the Federal Reserve's ACTUAL responsibilities, from their own website.

Hint: It's NOT "monetary policy. Period." And there is no reading of the responsibilities of the Fed that reflects well on Bernanke's performance.

[Promote]

America Has It Do Want You Do Baby !
Power To The People !
America Yes We Can !
Nice Move , President Obama , Change You Can Believe In !
Economics & Social Enigneers !
Peace & Blessings !

[hopefull252]

I thought Weathermen was the only job you could get it wrong so much of the time and still keep their jobs.

But it is a concern when bean counters are not accountable for their screw-ups.

[Rule Of Law]

Must not have been any out of work Goldman Sachs guys available...

[bertha112]

He reappointed Bernanke because he knew the media was licking their chops hoping he would appoint Krugman (or someone else). Looking for another feeding frenzy.

The MSM just discovered it has a pair (of balls), and they want to display them to the world by challenging Barack on every issue, every action, every movement. Until they stop posturing and tell the truth ( which by the way requires an uprising by the masses), President Obama won't be able to accomplish a thing.

I share a quote from one of my favorite movies: "Sneakers" (1992). The actor is Ben Kingsley, who plays a high-tech villain named Cosmo speaking to Robert Redford ( the good guy). I often use this quote when conversing with friends and combatants about who really controls things in this day and age.

it goes: "There's a war out there, old friend. A world war. And it's not about who's got the most bullets. It's about who controls the information. What we see and hear, how we work, what we think... it's all about the information!"

We're losing the war because no one is telling the truth.

[tvc 15]

let's set the record straight. the fed is a private instituion of the most powerful banks in the world and they vote on who they want their chairman to be. once they've made their selection they tell obama who to appoint - obama has no say in the matter