Wednesday, January 27, 2010

Ben Bernanke Likely to Be Re-Confirmed Thursday

That's what news media is saying.

Thanks to vigorous campaigning and persuasion by the Democratic leaders and President Obama himself, Ben S. Bernanke's re-confirmation as the chairman of the Federal Reserve seems secured, as of Wednesday night.

According to the latest Reuters' poll,

YES: 50 (36 Democrats, 13 Republicans, 1 Independent)
NO: 22 (6 Democrats, 15 Republicans, 1 Independent)
UNDECIDED/UNANNOUNCED: 28 (16 Democrats, 12 Republicans)

The vote is scheduled for Thursday.

In case you didn't know, the actual re-confirmation vote will only need simple majority of 51. The procedual vote to remove the holds placed by 4 Senators (Sanders, Bunning, DeMint, Vitter) will need super majority of 60, but the Senate Democratic leadership seems confident that they now have the necessary 60 votes.

Huffington Post call this a "double standard" for Ben. It will allow, for example, Senators like Barbara Boxer to have it both ways: vote yes to remove the holds (i.e. procedual vote) and then vote no on the actual re-confirmation.

Inquiring and suspicious minds want to know what kind of "persuasion" has taken place between Friday (when the re-confirmation was in grave doubt) and today. Mish Shedlock refers to this Wall Street Journal article on his blog post:

Senate Majority Leader Harry Reid’s tepid endorsement of Fed chairman Ben Bernanke on Friday left some investors queasy. Mr. Reid said his support for Mr. Bernanke was conditional. “To merit confirmation, Chairman Bernanke must redouble his efforts to ensure families can access the credit they need to buy or keep their home, send their children to college or start a small business.” He added that he expected an announcement from the Fed chairman on this issue soon.

Vincent Reinhart, an economist at the American Enterprise Institute and former Fed staffer, called the statement a “death trap” for the Fed because it suggests that the senator wanted something in return for his vote. Any acknowledgment or action by the Fed could be seen as a breach of its independence.

We asked Mr. Reid’s office to elaborate. His spokesman, Jim Manley, said the Senate majority leader, who is in a tough reelection battle in Nevada, was “fighting for his constituents.” Does that mean Mr. Reid’s vote is dependent on some action by the Fed to help homeowners, college-bound students or small businesses?

Mr. Manley said Sen. Reid does “not necessarily” expect any particular action before the vote. What are the “plans” that the Fed chairman said he would outline? Mr. Manley said the senator was looking for “additional efforts to help homeowners in Nevada” from the “Fed and the federal government.” He noted that the rest of Mr. Reid’s statement pledges support for Mr. Bernanke and also that Mr. Reid had talked to the president Saturday and is working to get additional votes for the Fed chairman.


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