Reporting from Washington — Federal Reserve Chairman Ben S. Bernanke's confirmation to a second term is in jeopardy because of growing opposition from Senate Democrats, who have been battered by public anger about the economy and the surprising loss of a Massachusetts Senate seat to the GOP this week.
At least four Senate Democrats have said they will oppose President Obama's decision to renominate the Fed chairman. Critics of Bernanke, who was named to his first term by former President George W. Bush, are pressing the case that he was an architect of policies that helped drag the U.S. into a period of recession and high unemployment. His term expires Jan. 31.
"It is time for a change," Sen. Barbara Boxer (D-Calif.) said Friday, hours after Sen. Russell D. Feingold (D-Wis.) announced his opposition to Bernanke. "It is time for Main Street to have a champion at the Fed. . . . Our next Federal Reserve chairman must represent a clean break from the failed policies of the past."
Bernanke received an important boost late Friday, when Senate Majority Leader Harry Reid (D-Nev.) endorsed his renomination. But several other Democrats remained noncommittal.
Strictly speaking, Bernanke needs only 51 votes to be confirmed, but he will probably need 60 to overcome a procedural hurdle.
Amid uncertainty about Bernanke's fate, the Dow Jones Industrial Average dropped 217 points, or 2.1%, on Friday, after falling a day earlier after Obama's announcement that he would pursue strict new banking regulations.
The White House still predicts that Bernanke will be confirmed. But the rebellion in party ranks underscores how deeply Democrats believe they need to do more to convince voters that they will fight for them against powerful institutions.
Other signs of Democratic efforts to speak to the public's economic anxieties include new opposition by some lawmakers to the Troubled Asset Relief Program, or TARP, the $700-billion bank-bailout fund. When Senate Republicans this week introduced an amendment to abolish the fund, 13 Democrats voted with them.
The Senate must approve an increase in the federal debt ceiling, but Democratic leaders are having trouble rounding up enough votes in the face of voter anger about federal spending.
Obama has proposed slapping new taxes and rules on big financial institutions. Visiting Ohio on Friday, the president launched a sharp new broadside against big banks.
"I just want to have some rules in place, so when these guys make dumb decisions you don't end up having to foot the bill," Obama told a crowd in the town of Elyria. "I don't mind having that fight."
Some Democrats are worried that their party will overreact to the Massachusetts defeat. Sen. Evan Bayh (D-Ind.), who supports Bernanke, said that a Senate vote blocking his confirmation would rattle markets and destabilize the economy at a time when consumers need reassurance.
"When I saw a few coming in with pitchforks and torches, I thought we might have a problem," Bayh said, joking about the mood of a party caucus where they were plotting postelection strategy. "We ought not to scapegoat Ben Bernanke."
Chris Krueger, a political strategist with Concept Capital, an institutional brokerage firm with a Washington-based research team, said in a research note Friday that there was a 55% chance Bernanke would not be reconfirmed.
"Bernanke is really looking like he's going to be the fall guy for Massachusetts, which is incredibly unfortunate and unwarranted," Krueger said.
Asked about the Bernanke nomination Friday, White House Deputy Press Secretary Bill Burton said that Obama had "a great deal of confidence in what Chairman Bernanke did to bring our economy back from the brink."
The president still thinks that Bernanke "is the best person for the job and will be confirmed by the United States Senate," Burton said.
Bernanke has met with at least 40 senators and many members of the House over the last year to counter criticisms of the Fed's performance before the recession and in the financial bailout. The professorial chairman also has taken his case directly to the public, defending the central bank and his record in a nationally televised interview and at a town-hall-style forum.
Bernanke has broad support on Wall Street and among academic economists. What many investors fear most is the uncertainty that would be created by a withdrawal or rejection of Bernanke's nomination.
In a week that included chaos in Washington politics and Obama's proposed new restrictions on banks, word of Bernanke's dwindling support appeared to weigh on the markets Friday.
"This is just adding one more brick in the wall of uncertainty," said Chris Rupkey, financial economist at Bank of Tokyo-Mitsubishi in New York. Although Rupkey expects Bernanke to be confirmed, he said that the Obama administration "seems to be losing confidence of investors."