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Bernanke defends tenure in quest for 2nd term - MarketWatch
Dec. 3, 2009, 11:12 a.m. EST
Bernanke defends tenure in quest for 2nd term
Fed chief tells lawmakers that central bank steered economy out of danger
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) -- Federal Reserve Board Chairman Ben Bernanke put on his boxing gloves Thursday and fought to defend his tenure and the central bank from charges it is beholden to Wall Street.
"I thank my colleagues throughout the Federal Reserve System for the remarkable resourcefulness, dedication, and stamina they have demonstrated over the past two years under extremely trying conditions," Bernanke said on Capitol Hill at a confirmation hearing for a second term as chairman of the central bank.
"They have never lost sight of the importance of the work of the Federal Reserve for the economic well-being of all Americans," he told members of the Senate Banking Committee.
News Hub: Bernanke Gets a Performance Review
Federal Reserve Chairman Ben Bernanke's Senate confirmation hearing today comes amid widespread anger over the Fed's recent performance. WSJ's Jon Hilsenrath discusses what to expect, in the News Hub.
Bernanke said the Fed had learned from the financial crisis and would be a more proactive regulator in the future.
Gone was the humble Princeton economics professor willing to remain in the background. Instead, Bernanke asserted that the Fed played a "central role" in ending the financial crisis and deep recession.
As severe as the crisis has been, it would have been worse without the Fed's actions, he said. The Fed acted "promptly and forcefully" in steering the economy out of danger, he said.
Just one of the Fed's programs to keep credit markets open over the past two years helped to finance 3.3 million loans to households, Bernanke asserted. The Fed's purchases of longer-term securities have helped to reduce mortgage rates, he said.
"Taken together, the Federal Reserve's actions have contributed substantially to the significant improvement in financial conditions and to what now appear to be the beginnings of a turnaround in both the U.S. and foreign economies," Bernanke said.
"...the Federal Reserve's actions have contributed substantially to the significant improvement in financial conditions..."
Fed Chairman Ben Bernanke
Lawmakers are skeptical
Bernanke has come under criticism from members of Congress in the wake of the $700 billion bank bailout.
He faces vocal opposition to his re-nomination. For instance, Sen. Bernie Sanders, an independent from Vermont, said he would put a "hold" on Bernanke's nomination. As a result, it will take 60 votes to bring Bernanke's confirmation to a vote in the Senate.
Fed watchers still expect Bernanke to be confirmed, but said the process could drag out until next spring. Bernanke seen surviving, but Fed may not.
Bernanke received strong words of endorsement earlier Thursday from Treasury Secretary Timothy Geithner, who said the U.S. was "lucky" that Bernanke was Fed chairman during the crisis.
At the start of the hearing, Bernanke received good news when Sen. Christopher Dodd, Democrat of Connecticut and the chairman of the banking committee, said he would support Bernanke's confirmation.
Dodd has been a sharp critic of the Fed's regulatory role in the run-up to the crisis, calling it an "abysmal failure." But Dodd said he would focus on altering the Fed's regulatory responsibility.
Dodd's primary reform initiative would take away bank supervisory power from the Fed and establish a single bank regulator.
Bernanke told Dodd that this reform would be a mistake. He said the Fed's supervisory powers helped the central bank keep the financial sector stable during 9-11 and other crises.
Dodd's efforts are just part of the most significant challenge to the Fed's prestige and structure in decades in the wake of the crisis. Bank reform legislation approved Wednesday by the House Financial Services Committee proposed to strip various powers from the central bank.
Bernanke sought to counter criticism of the Fed's 12 district banks. Presidents of the regional Fed are appointed by the boards of the district banks, a structure that has always irritated many members of Congress.
One proposal under consideration in Congress would have the chairman of the district bank boards subject to Senate confirmation.
Bernanke said the current structure has worked well and "ensures that our policymaking is informed not just by a Washington perspective, or a Wall Street perspective, but also a Main Street perspective."
No new bubbles seen popping up
There was little new information about the economic outlook or the Fed's monetary policy. Bernanke said "most indicators" suggest that the economy is emerging from recession and repeated that the Fed expects only moderate growth in coming quarters. As a result, the unemployment rate could remain high for some time, he said.
In question and answer session, Bernanke said he did not see any asset bubbles emerging in the United States.
"We do not see, at this point, any extreme mis-evaluation of assets in the United States," Bernanke said.
The Fed's monetary policy is aimed at the domestic conditions, he noted. If foreign governments see bubbles in their economies, they have to use their own monetary policy and other policy tools, Bernanke added.
"It is really not the United States' responsibility to make sure there are no misalignments in every economy in the world when those countries have their own tools to address them," Bernanke said.
Bernanke defends tenure in quest for 2nd term - MarketWatch
Dec. 3, 2009, 11:12 a.m. EST
Bernanke defends tenure in quest for 2nd term
Fed chief tells lawmakers that central bank steered economy out of danger
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) -- Federal Reserve Board Chairman Ben Bernanke put on his boxing gloves Thursday and fought to defend his tenure and the central bank from charges it is beholden to Wall Street.
"I thank my colleagues throughout the Federal Reserve System for the remarkable resourcefulness, dedication, and stamina they have demonstrated over the past two years under extremely trying conditions," Bernanke said on Capitol Hill at a confirmation hearing for a second term as chairman of the central bank.
"They have never lost sight of the importance of the work of the Federal Reserve for the economic well-being of all Americans," he told members of the Senate Banking Committee.
News Hub: Bernanke Gets a Performance Review
Federal Reserve Chairman Ben Bernanke's Senate confirmation hearing today comes amid widespread anger over the Fed's recent performance. WSJ's Jon Hilsenrath discusses what to expect, in the News Hub.
Bernanke said the Fed had learned from the financial crisis and would be a more proactive regulator in the future.
Gone was the humble Princeton economics professor willing to remain in the background. Instead, Bernanke asserted that the Fed played a "central role" in ending the financial crisis and deep recession.
As severe as the crisis has been, it would have been worse without the Fed's actions, he said. The Fed acted "promptly and forcefully" in steering the economy out of danger, he said.
Just one of the Fed's programs to keep credit markets open over the past two years helped to finance 3.3 million loans to households, Bernanke asserted. The Fed's purchases of longer-term securities have helped to reduce mortgage rates, he said.
"Taken together, the Federal Reserve's actions have contributed substantially to the significant improvement in financial conditions and to what now appear to be the beginnings of a turnaround in both the U.S. and foreign economies," Bernanke said.
"...the Federal Reserve's actions have contributed substantially to the significant improvement in financial conditions..."
Fed Chairman Ben Bernanke
Lawmakers are skeptical
Bernanke has come under criticism from members of Congress in the wake of the $700 billion bank bailout.
He faces vocal opposition to his re-nomination. For instance, Sen. Bernie Sanders, an independent from Vermont, said he would put a "hold" on Bernanke's nomination. As a result, it will take 60 votes to bring Bernanke's confirmation to a vote in the Senate.
Fed watchers still expect Bernanke to be confirmed, but said the process could drag out until next spring. Bernanke seen surviving, but Fed may not.
Bernanke received strong words of endorsement earlier Thursday from Treasury Secretary Timothy Geithner, who said the U.S. was "lucky" that Bernanke was Fed chairman during the crisis.
At the start of the hearing, Bernanke received good news when Sen. Christopher Dodd, Democrat of Connecticut and the chairman of the banking committee, said he would support Bernanke's confirmation.
Dodd has been a sharp critic of the Fed's regulatory role in the run-up to the crisis, calling it an "abysmal failure." But Dodd said he would focus on altering the Fed's regulatory responsibility.
Dodd's primary reform initiative would take away bank supervisory power from the Fed and establish a single bank regulator.
Bernanke told Dodd that this reform would be a mistake. He said the Fed's supervisory powers helped the central bank keep the financial sector stable during 9-11 and other crises.
Dodd's efforts are just part of the most significant challenge to the Fed's prestige and structure in decades in the wake of the crisis. Bank reform legislation approved Wednesday by the House Financial Services Committee proposed to strip various powers from the central bank.
Bernanke sought to counter criticism of the Fed's 12 district banks. Presidents of the regional Fed are appointed by the boards of the district banks, a structure that has always irritated many members of Congress.
One proposal under consideration in Congress would have the chairman of the district bank boards subject to Senate confirmation.
Bernanke said the current structure has worked well and "ensures that our policymaking is informed not just by a Washington perspective, or a Wall Street perspective, but also a Main Street perspective."
No new bubbles seen popping up
There was little new information about the economic outlook or the Fed's monetary policy. Bernanke said "most indicators" suggest that the economy is emerging from recession and repeated that the Fed expects only moderate growth in coming quarters. As a result, the unemployment rate could remain high for some time, he said.
In question and answer session, Bernanke said he did not see any asset bubbles emerging in the United States.
"We do not see, at this point, any extreme mis-evaluation of assets in the United States," Bernanke said.
The Fed's monetary policy is aimed at the domestic conditions, he noted. If foreign governments see bubbles in their economies, they have to use their own monetary policy and other policy tools, Bernanke added.
"It is really not the United States' responsibility to make sure there are no misalignments in every economy in the world when those countries have their own tools to address them," Bernanke said.