BUSINESS
03/23/2010 05:12 am ET | Updated May 25, 2011

Opposition To Bernanke Growing In Wake Of Mass. Vote

Opposition to the reconfirmation of Federal Reserve Chairman Ben Bernanke is growing in the Senate in the wake of a Republican Scott Brown's victory, fueled by populist rage, in the Massachusetts Senate race. Check back here for frequent updates.

UPDATE -- JANUARY 25, 2:10 PM ET: Federal Reserve Chairman Ben Bernanke, with his Fed career hanging by a thread, is on Capitol Hill Monday to work the Senate. Bernanke will meet with Sen. Dick Durbin (D-Ill.), who is in charge of counting votes for Democrats.

Highlighting Bernanke's tenuous position is the fact that Durbin himself was undecided on Bernanke's nomination just days ago. Senate Republicans are busy doing their own count to see how much they can chip in. On Monday, Democratic leadership aides expressed confidence that Bernanke would have enough votes for confirmation, with one speculating that there would be roughly 20 GOP votes available for Bernanke, who was originally appointed by President Bush.

Bernanke needs 60 votes to break a filibuster against his nomination and then 50 votes plus the vice president to be confirmed. One tactic to win the votes includes asking senators to vote to end the filibuster but then vote to oppose Bernanke. Such a move allows a senator to tell voters he or she opposed Bernanke, but still allows him to keep his chairmanship.

Bernanke and Durbin will meet with reporters shortly before 5:00 p.m.

On Sunday, Bernanke won a key endorsement from New York Times columnist Paul Krugman, who worried that his replacement could be even worse.

Meanwhile, MoveOn.org called on its online army to contact their Senate representatives and urge them to oppose Bernanke's reconfirmation. From the e-mail sent out Monday:

Dear MoveOn member,

With the struggling economy topping the list of concerns for most Americans, it's clear that we need new economic leadership in Washington

Instead, President Obama has renominated Federal Reserve Chair Ben Bernanke, a holdover from the Bush administration, for another term.

Bernanke presided over the biggest Wall Street bailout in history, making trillions of dollars in loans to big banks with no oversight.1 But after taking extreme measures to save the banks, Bernanke has shown no interest in helping regular folks who can't find jobs, even though ensuring "full employment" is explicitly part of his mandate.2

The Senate is getting ready to vote on Bernanke's nomination. Can you ask Sen. Gillibrand to vote against reconfirming Bernanke as Fed Chair?

At around the same time that MoveOn was emailing its members, Sen. John McCain (R-Ariz.), no friend of the advocacy organization, put out a statement aligning himself with their opposition to Bernanke. "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. "Therefore, I plan to oppose Chairman Ben Bernanke's confirmation for a new term as Federal Reserve Chairman."

On Thursday, McCain told HuffPost that he was undecided, but said that "I do think the case is being made that his policies were a major contributor to the meltdown." Apparently, the case has been made.

UPDATE -- JANUARY 22, 5:40 PM ET: One day after indicating that he had not decided on whether to support Ben Bernanke's renomination, Senate Majority Leader Harry Reid (D-Nev.) announced late Friday afternoon that he will support giving the Federal Reserve chairman another term. His full statement:

�Every decision I make about our economy is governed by the goal of putting Nevadans and Americans back to work, helping them keep their homes, and strengthening the middle class. My vote to confirm Ben Bernanke for a second term as Chairman of the Federal Reserve is no different.

�That goal also guided the conversation I had with Chairman Bernanke yesterday about his vision for a second term � a dialogue that continues. I made it clear that to merit confirmation, Chairman Bernanke must redouble his efforts to ensure families can access the credit they need to buy or keep their home, send their children to college or start a small business. He has assured me he will soon outline plans for making that happen, and I eagerly await them.

�No one pretends for a minute that our economy is back at full capacity. But Chairman Bernanke has worked hard to strengthen the economy in recent months by making critical loans available to millions of households and hundreds of thousands of businesses both large and small. He also deserves recognition for what didn�t happen: An expert on the Great Depression, Chairman Bernanke helped steer us away from a second one. Conventional wisdom rarely credits those who averted disaster, but that�s precisely what Chairman Bernanke did.

�While I will vote for his confirmation, my support is not unconditional. I know Chairman Bernanke is committed to transparency and accountability, and that is why I will hold him to the highest standards of both. The Senate will continue to demand visible and responsible results for the people we represent.

�Foreclosures and unemployment are endemic in Nevada. The American people are frustrated, and rightly so. I share their frustration, and I will continue to impress upon Chairman Bernanke that his most important job as America�s central banker is to give families and businesses the peace of mind that their economy is working for them.�

UPDATE -- JANUARY 22, 5:37 PM ET: Democratic Sen. Mary Landrieu of Louisiana will support Bernanke's reconfirmation, according to a press release from her press office. From Landrieu's statement:

"While I am angry with the behavior of Wall Street speculators and firmly believe we should improve how the Fed monitors any potential financial crisis, failing to reappoint Mr. Bernanke would only add turmoil to markets that are just beginning to recover."

UPDATE -- JANUARY 22, 5:32 PM ET: A spokesman for Sen. Dick Durbin of Illinois said that the second ranking Democrat in the Senate, and the man in charge of whipping votes, is now undecided as to how he'll vote on Bernanke's confirmation.

UPDATE -- JANUARY 22, 3:11 PM ET: Senate Majority Leader Harry Reid, recognizing that his caucus alone won't supply the needed votes to reconfirm Ben Bernanke as Fed Chair, has asked Republican Leader Mitch McConnell (R-Ky.) to count how many votes Bernanke has on the GOP side, McConnell spokesman Don Stewart tells HuffPost.

It's highly unusual for the two leaders to work together these days, but Democratic defections mean that the majority party alone won't supply the 60 votes required to overcome a presumed filibuster. Those votes will instead need to come from the same type of bipartisan coalition that backed the bailout.

The count is more a survey than an effort to whip up votes. The vote-counters themselves, McConnell and Reid, aren't certain in their own support. Neither has said publicly whether they'll back Bernanke.

Stewart said the count is ongoing, as senators have mostly left town for the weekend. "There is bipartisan support and there's bipartisan opposition," said Stewart. "But you need 60."

UPDATE -- JANUARY 22, 2:37 PM ET: Senate Majority Leader Harry Reid (D-Nev.) has not yet decided if he'll vote to reconfirm Federal Reserve Chairman Ben Bernanke on the Senate floor, spokesman Jim Manley told HuffPost Friday afternoon.

Manley said the decision could come soon. Reid huddled with Bernanke on Thursday and released a statement following the meeting in which he laid out basic economic concerns and then said he looked forward "to hearing to more from [Bernanke] about how he intends to address these issues." The full statement from Thursday:

Chairman Bernanke and I met today to discuss the best ways to strengthen and stabilize our economy. I believe more pressure needs to be applied to banks to lend money to small businesses and keep more Americans in their homes. Specifically, banks should move with greater urgency on loan modifications and accelerate the process of short sales to support homeowners. The main reason that the government stepped up to support the banking industry in their hour of need was so that they could support the American people through these tough economic times.


These are not only my concerns, but the concerns of Nevadans struggling to support their families. The American people expect our economic leaders to keep Wall Street honest and level the playing field for middle class families and I will continue to hold their feet to the fire to ensure this happens.

As the Senate prepares to take up Chairman Bernanke's nomination, I look forward to hearing more from him about how he intends to address these issues"

UPDATE -- JANUARY 22, 12:15 PM ET: On Air Force One, White House spokesman Bill Burton was quizzed about Bernanke and told a gaggle of reporters that Bernanke still has the president's confidence. Burton was asked if Obama was fighting for Bernanke's confirmation.

"Well, yes, as the President has said before, he has a great deal [of] confidence in what Chairman Bernanke did to bring our economy back from the brink. And he continues to think that he's the best person for the job, and will be confirmed by the United States Senate. So his feelings are known. But of course people on the White House staff and around the President continue to work to get that don," he said, according to a transcript provided by the White House.

Burton was asked if the president believes he has the 60 votes necessary, and if not, what Plan B might be.

"Well, let me just say that I didn't come back here to count votes in the United States Senate, but the President thinks he's the right person for the job and believes that he will be confirmed. In terms of plan B, if I were Robert Gibbs, I would denote that we don't engage in hypotheticals," he said.

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UPDATE -- JANUARY 22, 11:23 AM ET: California Democrat Barbara Boxer has become the latest senator to oppose the nomination of Ben Bernanke to a second term as Chairman of the Federal Reserve.

Boxer's opposition, which she announced in an exclusive statement to the Huffington Post, is a blow to Bernanke. Boxer is no firebreather on economic issues, but considered a more mainstream Democrat from a state that was considered comfortably blue -- until Tuesday's special election in Massachusetts, that is.

"I have a lot of respect for Federal Reserve Chairman Ben Bernanke. When the financial crisis hit in late 2008, he took some important steps to prevent what many economists believe could have been an even greater economic catastrophe," said Boxer.

"However, it is time for a change -- it is time for Main Street to have a champion at the Fed. Dr. Bernanke played a lead role in crafting the Bush administration's economic policies, which led to the current economic crisis. Our next Federal Reserve Chairman must represent a clean break from the failed policies of the past."

* * * *

UPDATE -- JANUARY 22, 9:40 AM ET: More sharks are circling around Ben Bernanke's nomination for a second term as chair of the Federal Reserve.

On Friday morning, yet another Senator -- Russ Feingold (D-Wisc.) -- announced that he will vote 'nay' on confirmation.

"A chief responsibility of the Chairman of the Federal Reserve is to ensure a sound financial system," read a statement issued from the Wisconsin Democrats office. "Under the watch of Ben Bernanke, the Federal Reserve permitted grossly irresponsible financial activities that led to the worst financial crisis since the Great Depression. Under Chairman Bernanke's watch predatory mortgage lending flourished, and 'too big to fail' financial giants were permitted to engage in activities that put our nation's economy at risk. And as it responds to the crisis it helped to usher in, the Federal Reserve under Chairman Bernanke's leadership continues to resist appropriate efforts to review that response, how taxpayers' money was being used, and whether it acted appropriately. When the full Senate considers his nomination, I will vote against another term for Chairman Bernanke."

Bernanke's term as chairman expires on January 31, and as of now, Senate Democratic leadership isn't sure if they have the votes to get him back into that post. Opposition to his confirmation has been driven by a strange-bedfellows coalition of progressives and movement conservatives -- most of whom blame Bernanke for missing the looming financial crisis or are highly skeptical of the Fed.

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UPDATE -- JANUARY 21, 9:22 PM ET: HuffPost's Jeff Muskus and I polled as many senators as we could find Thursday after posting this story.The question: Have they decided how they'll vote on the nomination of Federal Reserve Chairman Ben Bernanke for a second term?

We found 26 senators in all. Half were undecided; one wouldn't say; three were outright nays; only nine were firmly in the aye column.

Sen. Barbara Mikulski (D-Md.) summed it for many of her colleagues. The decision, she said, "gives me heartburn."

Along with Mikulski, eight other Democratic senators said they are undecided, including Maria Cantwell (Wash.), Ben Cardin (Md.), Patrick Leahy (Vt.), Carl Levin (Mich.), Amy Klobuchar (Minn.), Bill Nelson (Fla.), Bob Casey (Pa.), Barbara Boxer (D-Calif.) and Debbie Stabenow (Mich.).

Sen. Jay Rockefeller (D-W.V.) declined to say which way he would vote or whether he's made up his mind.

Republican Sens. Kit Bond (Mo.), John McCain (Ariz.) and Olympia Snowe (Maine) also said they are undecided.

The nine yes votes: Democrats Tom Carper (Del.), Kent Conrad (N.D.), Daniel Inouye (Hawaii), Paul Kirk (Mass.) and Mark Warner (Va.), plus Republicans Susan Collins (Maine), George Voinovich (Ohio) and Lindsey Graham (S.C.), along with independent Joe Lieberman (I-Conn.) all said they'd vote to confirm Bernanke.

The undecideds cited Bernanke's role in the financial collapse. "Usually at this stage of a vote like that, you have a better sense about it. I'm clearly and definitively undecided," said Casey. "Part of it is just how we analyze his stewardship at the time when our economy began to go in the wrong direction."

Sen. Byron Dorgan (D-N.D.) said he's voting no unless Bernanke tells Congress "who got direct loans from the Fed," he said. "He's essentially said to us he doesn't intend to tell the congress or the American people which investment banks got direct loans from the Fed for the first time in history."

Sen. David Vitter (R-La.), who opposes Bernanke, said he thinks Democrats might sacrifice him him to distance themselves from the White House. "I do think more people -- Democrats, in particular -- are looking for separation from the administration on votes, so that could be a factor," Vitter said.

Sen. Bob Corker (R-Tenn.), a leading Republican on financial issues, said that while he backed Bernanke in committee, he is reserving judgment for the floor, but leaning toward support. "I talked to Ben this morning," said Corker. "I've shared with him, I think this AIG situation has certainly created some issues....You'd have to be sort of not alive to realize, no doubt, this AIG situation certainly has been damaging to the Fed."

McCain, who has said he believes that his presidential campaign was undone in large part by the financial meltdown, cited it as a reason to pause. "I do think the case is being made that his policies were a major contributor to the meltdown," he said.

Stabenow said much the same. "I certainly have question about his role in what got us to the point where we had the financial collapse," she said.

Sen. Richard Shelby (R-Ala.) has made up his mind and is firmly opposed. "I was a Fed defender for 22 years -- probably one of the biggest ones on the banking committee," he said. "Once I got into the weeds on the Fed's role as a regulator dealing with the holding companies, their regulatory regime, and their record was weak and flawed and that is my beef right now."

* * * *

Martha Coakley and the Democratic supermajority in the Senate may not be the only casualties of the Massachusetts special election upset on Tuesday that sent Scott Brown to Washington.

Federal Reserve Chairman Ben Bernanke was originally scheduled for a vote on his confirmation Friday and was assumed to have the votes.

But on Wednesday, Sen. Bernie Sanders (I-Vt.), a Bernanke opponent, said that opposition was growing against his re-confirmation.

And on Thursday Jim Manley, senior communications adviser to Senate Majority Leader Harry Reid (D-Nev.), said that the vote had not been firmly locked in and won't take place this week. A spokeswoman for the Federal Reserve referred questions to the Senate.

Reading too much into the delay could overstate its immediate significance -- the Senate has a lot on its mind, after all -- but the populist rage against Wall Street now casts a once-secure confirmation in some doubt.

The election in Massachusetts has senators who previously considered themselves safe watching their backs, and they don't relish the prospect of a vote in favor of a man who failed to foresee the financial crisis and is closely associated with Wall Street.

A recent poll found that 47 percent of Americans think Bernanke cares more about Wall Street than Main Street, while only 20 percent think he works for Main Street. Independents, who swung heavily for Brown in Massachusetts, are even more opposed to Bernanke than Democrats or Republicans. Fifty percent of independents think he cares first about Wall Street; 15 percent think he prioritizes the needs of Main Street. That's a difficult vote in the face of an angry public.

If Bernanke is confirmed, he'll have to rely on the same coalition that moved the bailout through Congress, when the leadership of both parties joined forces to oppose the rank and file.

The combined leadership of the two major parties may still be able to push Bernanke's confirmation through, but Sanders said he sees a growing movement in a new direction.

"I sense that many Democrats see the Massachusetts election as a wake-up call," Sanders said. "There is a growing understanding that our economy is in severe distress, a greater appreciation that people are disgusted with the never-ending greed on Wall Street, and a better recognition that we need a new direction at the Fed."

Sanders said that Bernanke's record doesn't warrant a new term. The Federal Reserve has four main responsibilities: to maximum employment and prevent inflation; to keep the financial system from imploding; to maintain the safety and soundness of financial institutions; and to protect consumers against deceptive and unfair financial products.

Bernanke has gotten high marks in general for his response to the crisis, but has refused to say what institutions the Fed has provided money to. Unemployment remains high -- it has doubled during Bernanke's term -- and the Fed failed to do any consumer protection. The system imploded on his watch and nearly brought down the global economy. More than 140 banks, including major financial institutions, have collapsed during his tenure.

"People do not want another term for the man whose major job as Fed chairman was to protect the safety and soundness of our financial system but instead was asleep at the switch," Sanders said. "I am confident that more and more senators understand that we need a new Fed and a new Wall Street and will oppose Bernanke's confirmation."

Bernanke's term expires on January 31.