The Clock is Ticking on Big Ben

Should the Fed's head stay or should he go?

By Daniel Macht
|  Monday, Jan 25, 2010  |  Updated 4:57 AM PDT
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Federal Reserve Board Chairman Ben Bernanke is up for confirmation for another term.

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Time Magazine’s “Man of the Year” is fighting to keep his job this week.

Fed head Ben Bernanke has become a “lightning rod for public anger over the bailout of the banking system and the country's continued high unemployment rate,” as The Wall Street Journal puts it. Despite his detractors, Bernanke’s confirmation was still seen as a sure thing – until Massachusetts voters repudiated the status quo by electing GOPer Scott Brown to Ted Kennedy’s old seat. Next, a handful of powerful Dems worried about a "populist backlash" and pivoted on support for Obama’s top moneyman.

Here’s what the pundits are saying about the implications of the Bernanke clash, and whether he should stay or go.

  • If he stays there will be trouble…because Bernanke is “far too susceptible to political pressure,” argues the The Wall Street Journal editorial board. Bernanke’s Fed “lacks the political will to withdraw its historic post-crisis liquidity binge soon enough to avoid new asset bubbles,” they write. Translation: they’re worried about high inflation or another bubble and don’t think Bernanke will raise interest rates.
     
  • But if he goes it will be double…because rejecting Bernanke would “end up strengthening the hands of the [Fed’s] inflation hawks,” those the Journal’s editorial board might welcome, argues liberal economist and New York Times columnist Paul Krugman. Krugman writes that he can’t give Bernanke a “ringing endorsement” because the Fed head seems to “dangerously complacent” on unemployment. “It’s the Fed’s responsibility to do all it can to end that blight,” he writes.
     
  • Good thing it now looks like Bernanke will make it through, blogs Joe Weisenthal for The Business Insider. Bernanke’s odds of being confirmed at futures site InTrade have rebounded to the 90s from the low 60s, he cheers. "For a second there it seemed like a single election in Massachusetts had the potential to not only topple the direction of The White House and Congress, but take down the Federal Reserve (and possibly) its independence as well.”
     
  • What happens if Bernanke goes, ponders progressive blogger Matthew Yglesias for ThinkProgress. Well, Bernanke returns to the Fed’s Board of Governors, “a 14-year term that doesn’t expire for a long time,” Yglesias writes.

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