WASHINGTON (CN) – Senators voted 16-7 Thursday to send Federal Reserve Chair Ben Bernanke’s contentious nomination for a second term to the Senate floor, after many criticized his shortfalls in dealing with the economic crisis. “He missed a clear chance to take action,” Alabama Ranking Member Richard Shelby said. “I believe in accountability.”
Democrats on the Senate Banking, Housing and Urban Affairs Committee largely voted to reconfirm the Bush appointee, but Republicans were more split on the issue. Robert Bennett (R-Utah) said he supported Bernanke’s reappointment, because he worried about whom President Obama would nominate otherwise.
Lawmakers mostly agreed that Bernanke made mistakes, and Bernanke himself has admitted that he could have done more leading up to the recession to cushion the blow. Some criticized his push for the large bailout, his hesitation to regulate financial institutions and his decision to keep interest rates low, which increased lending and contributed to the housing bubble.
But supporters said the financial crisis was long in the making, and Bernanke only shares a small portion of the blame. Despite the missed opportunities, they said, Bernanke is the best prepared to lead the nation out of the recession.
Time magazine name him “Person of the Year” on Wednesday.
“I don’t think there’s any regulator that didn’t make mistakes leading up to this,” Bob Corker (R-Tenn.) said in Bernanke’s defense, adding that Bernanke is “the most well equipped person to lead the Fed.”
Corker cautioned against changing the Fed’s leaders, suggesting that a new chair might divorce himself from the Fed balance sheet, blame it on the past and fail to take responsibility.
In response to the financial crisis, Bernanke injected the market with capital by increasing the Fed’s debt from $800 billion to more than $2 trillion.
“And I’ll tell you, it worked,” Judd Gregg (R-N.H.) said.
New Jersey Democrat Robert Menendez agreed. “He did bring us back from the brink of a depression,” he said.
But Kentucky Republican Jim Bunning noted that the value of the dollar fell to 76 cents since Bernanke took the reins. He pointed to Bernanke’s faulty prediction in May that unemployment would not hit 10 percent, and to his prior assurances that Freddie Mac and Fannie Mae were adequately capitalized with no chance of collapse.
“We shouldn’t be paying Federal Reserve chairmen to get it wrong or to learn on the job,” Bunning said. He had been the only committee member to vote against Bernanke during his first nomination.
Ranking Member Shelby added, “I lack confidence in what little planning for the future he has articulated.”
Federal Reserve chairs have a 16-year term limit. Bernanke has served nearly one four-year term since 2006.
If Bernanke’s nomination is not confirmed by the end of January, he can no longer serve as Fed chairman and will only be eligible to sit on the board.