Bernanke saved us so he gains support for reappointment

After a year of crisis, Bernanke's star is rising
After a year of crisis and criticism, Bernanke gains support for reappointment as Fed chief

* By Jeannine Aversa, AP Economics Writer
* On Saturday August 22, 2009, 4:08 pm

WASHINGTON (AP) -- Last year, as the gravest financial crisis since the Great Depression shook the banking system, Ben Bernanke seemed nearly as beleaguered as the institutions themselves.

The Federal Reserve chief had initially underestimated the crisis -- and then seemed to inject new risk by unleashing breathtaking sums of money to fight it. Now, a strengthening economy is raising Bernanke's standing just as President Barack Obama must decide whether to reappoint him.

His supporters say Bernanke, 55, a scholar of the Great Depression, has the knowledge and ability to guide a sustainable recovery without igniting inflation. And they argue that without his bold interventions, the global financial crisis could have been much worse.

"He has risen to the occasion admirably after what you might argue was a slow start," says Alan Blinder, a Princeton professor who was Fed vice chairman in the mid-1990s. "His performance merits reappointment."

Bernanke, having just wrapped up the Fed's annual conference in Jackson Hole, Wyo., remains under pressure to help speed a recovery. Joblessness, now at 9.4 percent, is expected to hit double digits this year. Yet his riskiest task is to decide when and how to unwind the Fed's emergency rescue programs without endangering the economy.

His critics see failures in Bernanke's performance. They say he overplayed his hand by swelling the Fed's balance sheet to nearly $2 trillion, a once-unthinkable threshold.

They argue that the success of the emergency rescue programs has been inconsistent. And they blame Bernanke for politicizing the Fed: They point, for example, to his role in deciding which banks would benefit from taxpayer-funded bailouts and which would not.

"His handling of the crisis has put the Fed in an awkward political position," says William Poole, former president of the Federal Reserve Bank of St. Louis, who doesn't think Bernanke should be reappointed.

Other decisions, too, should have been left to Congress, says Poole, who retired in 2008 after 10 years at the regional Fed bank.

Regardless of the criticism and Obama's verdict, Bernanke will go down as a monumental figure, for better or worse, in the history of the Federal Reserve. Which is ironic. When Bernanke became chairman in February 2006, after Alan Greenspan's 18-year tenure, he tried to tilt the spotlight away from himself, preferring to elevate the agency itself.

The financial crisis demonstrated Bernanke's ability to build consensus at the Fed and to engineer creative solutions not normally in the agency's playbook, said Allen Sinai, chief global economist at Decision Economics Inc.

"Those are huge pluses," Sinai said.

Twenty-six states have reported unemployment at 10% and up to 16%, foreclosures are higher, bank failures at 81 and counting, and the stock market is overpriced.

is a gallows pole. His hands run red with the blood of suffering Americans, to say nothing of the perpetual-war policy that the policy of "managed inflation" makes possible.

why would he worry about the average person? Agree with you.

He saved the banks and investment brokers,
at the expense of "us."

What you said is sadly so true.