2nd term for Bernanke

Source: Straits Times Aug 25, 2009

2nd term for Bernanke

OAK BLUFFS (Massachusetts) - PRESIDENT Barack Obama on Tuesday awarded Federal Reserve Chairman Ben Bernanke a second term, saying his bold 'out-of-the-box' thinking would help steer the US economy out of the worst slump since the 1930s.

NEED TO PUMP LIQUIDITY INTO THE FINANCIAL SYSTEM MR BERNANKE has worked closely with the Treasury Department and the White House in plotting a route out of the recession and stabilising and reforming the debt-laden US financial sector. He now faces the delicate decision of how quickly to scale back the massive government effort to pump liquidity into the financial system. ... more BEN BERNANKE - FROM ECONOMICS PROFESSOR TO FEB CHIEF * MR BERNANKE, who has to be reconfirmed by the Senate, had taken unusual high-profile steps for a Fed chief of late, appearing in a profile on a popular US newsmagazine program, CBS's '60 Minutes' and at a town-hall meeting in Kansas City, Missouri. * Before his appointment as chairman of the Federal Reserve on Feb. 1, 2006, he was chairman of the President's Council of Economic Advisers, from June 2005 to January 2006. ... more MR OBAMA'S spokesman Bill Burton explained the president had made the surprise announcement merely to scotch speculation about Mr Bernanke's future. Some experts had predicted that Mr Obama would replace the central banker with one of his top advisors Larry Summers for the new term beginning next year. ... more

Mr Obama suddenly interrupted his vacation on the resort island of Martha's Vineyard to make the announcement, praising Mr Bernanke's battle against 'one of the worst financial crises that this nation and the world have ever faced.'

Lauding the cerebral Mr Bernanke for learning lessons of the 1930s Great Depression, and his background, temperament, courage and creativity, he said the Fed chief was the ideal man to help lead the economic rebound.

'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,' Mr Obama said.

The president warned however that the economy and the financial system had a 'long way' to go before its full health was restored.

Mr Bernanke, 55, will be expected to win Senate confirmation for his reappointment, but could face stiff questioning from some lawmakers who believe he did too little to stave off the recession and protect consumers.

Mr Obama's unexpected announcement, on what aides had billed as a 'no news' vacation, will likely give the financial markets, on which many Americans depend for their retirement savings, a quick boost. It may also dampen criticism of the president's economic management on a day when his Office of Management and Budget and the Congressional Budget Office are both due to release new statistics on the ballooning deficit.

Mr Obama's sudden announcement could also suck media interest away from a flurry of lawmakers' town hall meetings featuring attacks on his limping health care reform plan and a new row over Bush-era 'war on terror' tactics. His praise for Mr Bernanke read like a defense of his own economic policy, which is facing mounting opposition as his political approval ratings decline.

'Almost none of the decisions that he or any of us made have been easy,' he said, mentioning auto and financial industry rescues and his administration's bumper economic stimulus package. 'They faced plenty of critics, some of whom argued that we should stay the course or do nothing at all. But taken together, this bold, persistent experimentation has brought our economy back from the brink.'

Mr Bernanke admitted that the Federal Reserve had been challenged by the unprecedented events of recent years. 'We have been bold or deliberate as circumstances demanded,' he said, adding that his objective was to restore a stable financial and economic environment. -- AFP

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