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Obama nominates Ben Bernanke for a second Fed term

The president, breaking from his summer vacation to make the announcement, lauds the 'bold action' of the Federal Reserve chairman during a time of economic crisis.

August 26, 2009|Christi Parsons and Jim Puzzanghera

OAK BLUFFS, MASS., AND WASHINGTON — As President Obama announced his decision to renominate Federal Reserve Chairman Ben S. Bernanke for a second term, both men presented a message of stability in the face of a persisting recession.

"The Federal Reserve, like other economic policymakers, has been challenged by the unprecedented economic events of the last few years," Bernanke said after the announcement Tuesday. "We have been bold."

The president emphasized Bernanke's extensive experience and the continuity of his remaining in the job, saying that "his background, his temperament, his courage and his creativity" helped the administration prevent the recession from turning into a second Great Depression.

The announcement was well received by some in the business community and in the Senate, where Bernanke was expected to win an easy confirmation. But he still will face some sharp questions from lawmakers about whether he responded quickly enough to the mortgage crisis or competently led the bailout of financial firms.

"I still have serious concerns about the Federal Reserve's failure to protect consumers," said Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate Banking Committee. But Dodd also said he believed that Bernanke was "probably the right choice" for the job.

Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., said Bernanke's re-nomination "makes a lot of sense."

"I think he's a very steady hand, a very thoughtful person. I think it was the best choice from the market perspective. He's a known quantity to the markets," said Bair, who has worked with Bernanke on banking regulatory issues and broader economic policy during the financial crisis.

Briefly interrupting his island vacation on Martha's Vineyard to make the announcement, Obama said that Bernanke, who was standing next to him, had led the Fed through "one of the worst financial crises that this nation and the world have ever faced."

Bernanke is a scholar of the Great Depression who moved swiftly last fall to avert another crisis in the face of a sudden credit crunch. He and then-Treasury Secretary Henry M. Paulson persuaded President George W. Bush and Congress to authorize $700 billion for an emergency bailout of failing banks and insurers.

Although he's a Republican appointed by Bush, Bernanke has worked closely with Obama's new economic team.

Bernanke's term expires Jan. 31. Obama had praised the 55-year-old Princeton University economist for his response to the financial crisis, which involved aggressive use of the Fed's emergency powers.

Bernanke's policies "have faced plenty of critics, some of whom argued that we should stay the course or do nothing at all," the president said Tuesday. "But taken together, this "bold, persistent experimentation" has brought our economy back from the brink."

But Obama pointed out quickly that "we are a long way away from completely healthy financial systems and a full economic recovery."

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cparsons@latimes.com

jim.puzzanghera@latimes.com

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