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Bernanke Draws Mostly Positive Reviews

The candidate wins praise from a Senate panel for his credentials and independence. Consumer groups urge greater protections.

October 25, 2005|Joel Havemann | Times Staff Writer

WASHINGTON — President Bush's choice of Ben S. Bernanke to succeed Alan Greenspan as chairman of the Federal Reserve Board drew scattered expressions of concern Monday from members of Congress and consumer groups.

But it received good reviews among some of the people who matter most to the nomination: the leadership of the Senate Banking, Housing and Urban Affairs Committee, which will conduct confirmation hearings.

Committee Chairman Sen. Richard C. Shelby (R-Ala.) praised Bernanke as "a highly qualified individual" who had already won Senate confirmation in the past, first as a member of the Fed board and most recently as chairman of the president's Council of Economic Advisors, his current job.

Shelby said he could not predict whether the Senate would vote on Bernanke by year's end.

"We're not going to rubber-stamp the nomination," he told reporters. "This is a very important job. I expect a protracted hearing."

Sen. Paul Sarbanes of Maryland, the Banking Committee's senior Democrat, also praised Bernanke, saying he had served with distinction in the government and, before that, at Princeton University.

Sarbanes said he would use the confirmation hearings to determine whether Bernanke was sufficiently independent of the administration and not devoted to "inflation targeting" to the point at which he would sacrifice maximum employment to stabilize prices. Bernanke has written that inflation of 1% to 2% is ideal and that the Fed should lift interest rates if prices moved faster.

Edward Gramlich, who served on the Fed during Bernanke's entire tenure from 2002 to June, sought to reassure Democrats that Bernanke would not tilt his decisions toward the Bush administration's desires.

"Ben is a very nonpolitical guy," said Gramlich, a Democrat who is now provost of the University of Michigan. "I can't think of any issue where we differed because of politics."

The only outright opposition to Bernanke on the Banking Committee came from a Republican, Sen. Jim Bunning of Kentucky.

Bunning said in a statement that when Bernanke joined the Fed, he promised not to be a rubber stamp but "an independent voice who would stand up to the chairman when he believed he was wrong. Sadly, Dr. Bernanke never once cast a dissenting vote." Bunning said Bush had "chosen poorly."

Democrats who usually hurl brickbats at Bush's nominees had nothing but bouquets for Bernanke.

"We need a careful, non-ideological person who understands that the Federal Reserve's main job is to fight inflation, and Ben Bernanke seems to fit that bill," said Sen. Charles E. Schumer (D-N.Y.), a member of the Banking Committee. But Schumer also said he was troubled by Bernanke's recent support for more tax cuts.

Sen. Edward M. Kennedy (D-Mass.) praised Bernanke as "certainly well-qualified." He added that it was the Fed's job not only to provide stable prices for business but also to keep interest rates low enough that ordinary Americans "have access to affordable lines of credit to buy homes and send their children to college. Hopefully, Mr. Bernanke's priorities will reflect the needs of working America, not just corporate America."

Five consumer groups issued a statement saying that Bernanke, as chairman, should use the Fed's regulatory powers to protect consumers from credit card abuses, unfair mortgage policies and banks that hold checks for longer than required to make sure they are supported by sufficient funds. The groups were Consumers Union, U.S. Public Interest Research Group, the National Consumer Law Center, Consumer Action and the Consumer Federation of America.

Business groups that feel the effect of Fed regulation, by contrast, reacted warmly to Bernanke's nomination.

"We have worked with Dr. Bernanke as a Fed governor and as chair of the president's Council of Economic Advisors and found him to be extremely thoughtful, pragmatic and scholarly," said Edward L. Yingling, president of the American Bankers Assn.

Micah S. Green, president of the Bond Market Assn., said: "Dr. Bernanke has a firsthand understanding of the relationship between interest rates, inflation and monetary policy. We expect him to carry on the Fed's goals of fighting inflation and promoting steady economic growth."

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