United States President Barack Obama on Tuesday awarded Federal Reserve chairperson 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.
Obama suddenly interrupted his holiday on the resort island of Martha’s Vineyard to make the announcement, praising Bernanke’s battle against “one of the worst financial crises that this nation and the world have ever faced”.
Lauding the cerebral 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,” 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.
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.
Obama’s unexpected announcement, on what aides had billed as a “no news” holiday, 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.
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.
Obama’s praise for Bernanke read like a defence 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.”
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.
Obama spokesperson Bill Burton explained the president had made the surprise announcement merely to scotch speculation about Bernanke’s future.
Some experts had predicted that Obama would replace the central banker with one of his top advisers Larry Summers for the new term beginning next year.
“There’s been a lot of speculation out there, and the president wanted to put it to rest,” Burton said.
Bernanke was selected as Federal Reserve chairperson by Obama’s predecessor George Bush in 2005 to replace retiring Fed chairperson Alan Greenspan, who served for 18 years and presided over a golden era of economic prosperity.
At the tail end of Bush’s second term and the beginning of Obama’s presidency, Bernanke was a key player in stabilising markets and prescribing the antidote to the worst crisis since the Great Depression of the 1930s.
He has enjoyed broad support on Wall Street, for the sweeping and sometimes unorthodox methods he has used to save the banking sector, redefine the financial industry and keep the recession from turning into a depression.
Senate banking committee chairperson Chris Dodd vowed to hold a “thorough and comprehensive confirmation hearing” for Bernanke’s renomination.
“I still have serious concerns about the Federal Reserve’s failure to protect consumers and I strongly believe these responsibilities should go to an independent consumer financial protection agency,” Dodd said in a statement, while calling Obama’s decision “probably the right choice”.
But Dodd criticised the Fed chief for being “too slow to act during the early stages of the foreclosure crisis,” although the senator acknowledged that Bernanke “ultimately demonstrated effective leadership and his reappointment sends the right signal to the markets”. — AFP