Mark Zandi on Ben Bernanke's Chances for a 2nd Term

12.17.2009

Federal Reserve Chairman Ben S. Bernanke has been praised by President Obama and hailed by most mainstream economists for bold policies that played a critical role in pulling the U.S. economy back from the brink of disaster.

The Fed chief even won a celebrity accolade Wednesday when Time magazine named him Person of the Year.

But instead of basking in glory, the 56-year-old professorial Fed chairman is fighting for his job -- and for the survival of policies at the heart of efforts by the central bank and the Obama administration to keep the nation's fragile recovery on track.

Although Bernanke is expected to win support from the Senate Banking Committee today and eventually be confirmed by the full Senate for a second four-year term, he remains under continual attack in Congress.

In recent months many members of Congress from both parties have berated the Fed and its chairman, in part over the Fed's failure during the housing boom to stop reckless behavior by banks and in part because of public indignation over billion-dollar bailouts for Wall Street. The anger has fueled drives in both chambers to curb the Fed's power and subject its actions, including monetary policymaking, to congressional scrutiny.

"It is ironic that he's under such criticisms given that he played such a key role in ending the financial crisis," said Mark Zandi, chief economist at Moody's Economy.com. "I think if the Fed hadn't acted aggressively and reduced rates to zero, the financial system would still be in disarray and we'd still be in a recession." (LA TIMES) > View article