Some members of the Senate have turned against the nomination of Ben Bernanke as the chairman of The Federal Reserve. They feel that he may be to0 closely associated with the actions of the central bank before the recession. These Senators say he could have done more to prevent the disaster. They are actually running frightened after the improbable Republican victory in the election for the seat held by Ted Kennedy of 47 years. Suddenly, the new is in, and the new began just a few months ago. No matter that Bernanke’s work was critical in stopping the meltdown of the credit markets late in 2008. He began his service in a period before the rise of the “Tea Party.”
Obama still strongly supports Bernanke. He can afford to. The campaign for the Presidential election for 2012 is far off. Senators including Barbara Boxer of California and Russ Feingold of Wisconsin must face the voters this year. Their opposition to Bernanke and his policies is politically convenient. The Fed chief is part of the “old world” which is anything or anyone who was involved in the federal government before late 2009.
Obama is faced with a hard choice if more of the Senate moves away from confirmation of Bernanke. The President will have to find an alternative who he can claim is more friendly to Main Street and less friendly the Wall St., although Bernanke has no ties to the financial community and never did.
Larry Summers, current head of the National Economic Counsel and a former Treasury Secretary, is too controversial. He left the presidency of Harvard after negative comments about the academic abilities of women. Paul Volker is the Chairman of the Economic Recovery Advisory Board, an organization set up by Obama. He is the architect of the current attack against large banks. A former Fed chair, he would be a perfect choice. But, he was born in 1927.
It would be hard to sell the Senate on any of the four members of the Fed’s board. They are too closely associated with its recent policies. It may be the the president of one of the Fed’s twelve regions would do. Janet Yellen, head of the Fed in San Francisco has taken views different from those of the central bank. She might be a nominee. If confirmed, she would also be the first female head of the central bank.
The other pool from which a nominee might come is the academic one. Bernanke was a professor at Princeton. Winners of the Noble Prize for economics include a number of university professors. That includes Paul Krugman and Joseph Stiglitz, but they are both outspoken and may be too controversial to be nominees.
That leaves Nouriel Roubini, but he makes too much money on the lecture circuit to take a job as a civil servant.
Douglas A. McIntyre