by Xinhua Writer Liu Lina
WASHINGTON, Aug. 25 (Xinhua) --
Ben Bernanke's nomination by U.S. President Barack Obama to serve as the
country's Federal Reserve Chairman for a second term has won wide
acknowledgement. However, challenges facing the nation's most powerful economic
policymaker remain tough.
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Photo dated on May 5, 2009 shows U.S.
Federal Reserve's Chairman Ben Bernanke testifies on Capitol Hill in
Washington. (Xinhua, File Photo)
Photo Gallery>>> |
WIDESPREAD SUPPORT
During a break from his vacation on Martha's Vineyard
in Massachusetts, Obama made the announcement and praised Bernanke for
aggressively pulling the economy from the brink, saying the 55-year-old Fed
chief tackled the crisis "with bold action and outside-the-box thinking" that
helped limit the damage.
Obama said that "the actions we have taken to
stabilize our financial system, repair our credit markets, restructure our auto
industry, and pass a recovery package have all been steps of necessity, not
choice."
Recent data showed that the U.S. economy is on the
verge of recovery. Olivier Blanchard, chief economist of the International
Monetary Fund, said about one week ago that the U.S. economy has started to
recover.
In last week's annual meeting on macroeconomic
policies, Bernanke also noted that the U.S. economy is "leveling out."
Still, the nascent recovery needs cautious nurturing.
Apart from acknowledging Bernanke's work to tackle
the financial crisis and economic recession, Obama's decision also aimed to
maintain continuity in the country's economic policy in a time of crisis. To do
otherwise could have jeopardized the still-fragile recovery in which Bernanke
played a central role.
Christopher Dodd, Senate Banking Committee Chairman,
said in a statement "While I have had serious differences with the Federal
Reserve over the past few years, I think reappointing Chairman Bernanke is
probably the right choice."
Bernanke's re-nomination "will bring continuity to
the Federal Reserve that will send the right signal to the marketplace," said
Senate Majority Leader Harry Reid.
Wall Street has given almost unanimous approval to
Bernanke's nomination. According to a recent survey by The Wall Street Journal
in August, 42 out of 43 economists surveyed agreed that Bernanke should stay as
the number one economic policy maker.
CONTROVERSY REMAINS
Although Bernanke has won the vote of confidence, he
is not free of controversy. Criticism from Capitol Hill should in no way be
ignored.
Some critics say Bernanke was too slow to recognize
the severity of the crisis and failed to prevent the worst crisis and recession
in generations.
They said that Bernanke failed to detect the risks
caused by the housing and credit bubble earlier in the decade.
In his first year as chairman, and in jobs before
that in the Bush administration and as a Fed governor, he did little to raise
alarm bells or draw attention to what we now know as an irrationally enormous
housing bubble and the deep fragility in the financial system and regulatory
system that relied on self-policing markets.
Others worry the Fed's measure to flood the financial
system with too much money could cause inflation later.
Also, critics argue that Bernanke is part of the
past. He has been deeply involved in every step of the crisis. He is therefore
as tied to the mistakes of the past as he is to the successes.
Simon Johnson, former chief economist with the
International Monetary Fund, now a professor at the Massachusetts Institute of
Technology's Sloan School of Management, said "I don't have a better candidate
in mind, but I'm worried Bernanke has the same two big weaknesses that Greenspan
had: keeping interest rates too low and being super-pro-finance."
"Greenspan's philosophy was that you don't have to
worry about spotting bubbles; you can just clean up after them. Bernanke hasn't
said anything different," said Johnson.
CHALLENGES AHEAD
If the Senate confirms the renomination, Bernanke
would serve asecond four-year term after his current one ends on Jan. 31.
Now, how to boost the economy on the track of stable
and sustainable recovery becomes the focus of his job among other challenges.
"If confirmed by the Senate, I will work to the
utmost of my abilities -- with my colleagues at the Federal Reserve and
alongside the Congress and the administration -- to help provide a solid
foundation for growth and prosperity in an environment of price stability,"
Bernanke said.
Obama is counting on Bernanke to nurse the economy
back to health at a time when unemployment, home foreclosures and bank failures
are still mounting.
Bernanke would, in his second term, begin the
difficult task of unwinding the Fed's extensive interventions in the economy.
"We have been bold or deliberate as circumstances
demanded, but our objective remains constant: to restore a more stable economic
and financial environment in which opportunity can again flourish, and in which
Americans' hard work and creativity can receive their proper rewards," Bernanke
said.
Also, Bernanke has to keep a delicate balance among
other economic powers from the government.
As the U.S. government is promoting a financial
regulation overhaul led by the Department of Treasury, a proposal to establish
an independent Consumer Financial Protection Agency has become a focus of
argument, in which the Fed claimed that keeping the agency was part of its
responsibility.
Meanwhile, Christopher Dodd said "I still have
serious concerns about the Federal Reserve's failure to protect consumers, and I
strongly believe these responsibilities should go to an independent consumer
financial protection agency."
Despite the pros and cons, the market welcomed
Bernanke's reappointment. U.S. stock index futures were higher Tuesday on the
news.
Analysts say now investors around the world are more
focused onwhether a global economic recovery is really underway.
Obama reappoints Bernanke as Fed
Chairman
WASHINGTON, Aug. 25 (Xinhua) -- U.S. President Barack Obama
announced Tuesday morning to appoint Ben Bernanke as the Federal Reserve's
Chairman for a second term, electing to maintain continuity in the nation's most
powerful economic policymaking job in a time of crisis.
During a break from his vacation on Martha's Vineyard
in Massachusetts, Obama made the announcement and credited Bernanke from
aggressively pulling the economy from the brink. He said the 55-year-old
Bernanke tackled the crisis "with bold action and outside-the-box thinking" that
helped limit the damage. Full story
