By Silla Brush - 06/24/09 08:10 PM EDT
Democrats and Republicans are increasingly critical of the Federal Reserve’s sweeping actions to stanch the financial crisis, but lawmakers won’t yet say whether President Obama should reappoint Ben Bernanke as Fed chairman.
Bernanke’s four-year term is up at the end of January, forcing Obama to make a decision about one of the top posts on the economy just as the administration and Congress work on a major overhaul of the nation’s financial regulations.
Congressional investigators have been looking into the Fed’s role in encouraging Bank of America to purchase Merrill Lynch at the height of the crisis. Rep. Darrell Issa (R-Calif.), ranking member on the Oversight Committee, said on Wednesday that the Fed engaged in a “cover-up” and hid details about the merger, completed in January 2009, from other federal agencies.
Meanwhile, lawmakers from both parties are raising questions about Obama’s proposal to grant the Fed broad new powers to prevent another crisis.
Those concerns could make the next confirmation process far more contentious than the six that have occurred in the last two decades. Alan Greenspan received at most seven votes of opposition in the Senate, while Bernanke was confirmed on a voice vote in 2006.
“I don’t know yet,” said Senate Banking Committee Chairman Chris Dodd (D-Conn.). “That’s a decision the president gets to make.”
Sen. Jim DeMint (R-S.C.) said, “It won’t be my decision whether he is held over or not, but right now I’m concerned that they have lost their independence and are too cozy with Treasury.”
Obama has yet to signal his intentions, but the president on Tuesday stood behind Bernanke and the Fed’s recent actions. “I think, since the crisis has occurred, Ben Bernanke has performed very well,” Obama said.
The Fed chairman has recently conducted a series of high-profile media interviews, taken questions in public venues and testified repeatedly on Capitol Hill.
Still, most Americans are unaware of the Fed’s actions and Bernanke in particular.
According to an April poll conducted by the Pew Research Center for the People & the Press, only 45 percent of those surveyed could identify Bernanke, who was appointed by President Bush.
But Democratic support for Bernanke has improved markedly, according to an April Gallup poll. A year ago, 40 percent of Democrats were confident in Bernanke; 64 percent now say they are. By comparison, only 36 percent of Republicans and 44 percent of independent are confident in Bernanke in 2009, according to the Gallup poll.
While the Fed has always had critics on Capitol Hill, whether from libertarian or populist camps, a broad range of lawmakers are now seeking greater oversight of and transparency at the central bank. The bank traditionally has tried to avoid political and partisan interactions to maintain its independence as it sets monetary policy.
“Right now, my gut is that there needs to be a greater sensitivity with regard to consumers, Main Street, foreclosures,” said Rep. Elijah Cummings (D-Md.). “I think there needs to be a greater balance between Wall Street and Main Street. The jury is still out whether Mr. Bernanke has moved to that balance.”
Rep. Brad Sherman (D-Calif.), a vocal opponent of some of the government’s bailout programs, said that Bernanke has not construed the Fed’s authorities too broadly and said the chairman is “competent,” but added that he is worried about Bernanke’s coziness with Wall Street.
“Elections do have consequences,” Sherman said. “So normally you would want to appoint someone who has demonstrated a dedication to Democratic values. I would prefer Democratic and populist values.”
Most lawmakers are waiting until Obama makes his pick before weighing in fully.
“If we come out of this recession with the Fed’s leadership, people are going to say, ‘Thank goodness he was there,’ ” said Senate Majority Whip Dick Durbin (D-Ill.).
Kris Kitto contributed to this article.
This article was corrected at 11 p.m.