The Federal Reserve is closer to finding a replacement for Alan Greenspan, who will be retiring as Chairman in January. The Senate Banking, Housing, and Urban Affairs Committee has recommended Ben Bernanke’s confirmation to the full Senate. Bernanke serves as chairman of the White House Council of Economic Advisors as well as a former Princeton economics professor and Fed governor.
Bernanke’s nomination received its only opposition from Sen. Jim Bunning (R-KY). Bunning voiced concerns that Bernanke was not enough of an independent thinker as the outgoing Greenspan has demonstrated.
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Positive affirmations were abundant during the committee’s nomination deliberations. Banking Committee Chairman Richard Shelby (R-AL) said to the Associated Press that “Doctor Bernanke is eminently qualified and a superb choice for the nomination of Federal Reserve Chairman.” Sen. Charles Schumer said that Bernanke enjoys “broad bipartisan support” and “has the potential to follow in the footsteps of the giants like Paul Volcker and Alan Greenspan.”
"He is eminently more qualified than Greenspan in the context of his background, his expertise," said Robert Smith, chief investment officer at Smith Affiliated Capital in Reuters.
The Associated Press reported that the day before the Senate Committee’s recommendation, Bernanke sat before the Banking Committee offering his opinions on a variety of economic issues facing our nation. These challenges include bloated federal budgets, trade deficits, the current housing bubble, rising energy prices, and a job market needing a boost.
The Baltimore Sun reported that Bernanke reassured the senators with his positive view of the nation’s strong economy saying that inflation appeared to be in check and that the housing bubble is “stabilizing.” He also put aside fears of a dollar crisis caused by the dumping of U.S. dollars by foreign holders of our currency.
Bernanke has said that he would continue the policies of Alan Greenspan as well as maintain the political independence of the Federal Reserve according to USA Today. Although saying more certainty and openness about Federal Reserve policy could be provided by inflation targeting, Bernanke said that he didn’t intend “rigid or mechanical” policymaking. Chairman Greenspan has opposed inflation targeting.
“We’ve seen … in the past 20 years that the economy’s become more stable, that employment growth and output growth has become stronger and more stable, that recessions have been less frequent. I attribute that to the maintenance of stable inflation, Bernake is quoted as saying by USA Today “I’m entirely in favor of maximum employment. I believe this is a method to achieve it.”
The Senate vote leading to Bernanke’s nomination is yet unscheduled but is due to come before Fed Chairman Alan Greenspan leaves the venerable post on January 31 after 18 years.