Contentious hearing for Bernanke?

By Alex Isenstadt
|  Tuesday, Aug 25, 2009  |  Updated 4:30 PM CDT
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Contentious Hearing for Bernanke?

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Federal Reserve Chairman Ben Bernanke testifies before the Senate Banking, Housing and Urban Affairs Committee on Captiol Hill February 24, 2009 in Washington, DC.

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Ben Bernanke may be a shoo-in for confirmation as Federal Reserve chairman, but that doesn't mean his confirmation hearing will be painless.

Senate aides from both parties are predicting a contentious hearing, with heavy criticism from both the left and the right.

Republicans are going to use the fall public hearing as a forum to rip the Obama administration's fiscal policies, hammer away about the deficit and rail about bailouts. 

Democrats, some of whom would have rather seen a liberal nominee, plan to push Bernanke on why the Fed wasn't more pro-active before the financial meltdown last year.

"There will be a thorough and comprehensive confirmation hearing," Sen. Chris Dodd, the committee's chairman, said this morning. "I expect many serious questions will be raised about the role of the Federal Reserve moving forward and what authorities it should and should not have."

Sen. Richard Shelby, the top Republican on the Banking Committee, says he plans to highlight the Fed's failures as a bank regulator, how such failures contributed to the financial crisis, and whether Chairman Bernanke's performance as the chief regulator merits his reconfirmation.

"I don't think he'll have a problem with votes, but the process will be interesting," said a GOP Senate aide. "I don't think the hearings will be pain free."

Senate aides said Tuesday that no time had been set for Bernanke's hearings.

Bernanke, who joined President Obama in Martha's Vineyard this morning to announce his re-nomination, has earned praise in many quarters for his handling of the Wall Street financial crisis of 2008. Bernanke, a former chair of the Economics Department at Princeton University, took a bold approach to the crisis, advocating the cutting of interest rates and a flooding of the markets with cash.

But Dodd, facing a daunting 2010 re-election contest and under withering criticism that he is too close to Wall Street — is expected to take the lead in questioning Bernanke on topics ranging from regulatory reform to TARP to consumer protection.

There are also bound to be questions from those on the left on whether Bernanke could have done more to ward off the home mortgage crisis.

"As a result of the greed, irresponsibility and illegal behavior of Wall Street our country has experienced the worst economic decline since the Great Depression," said Sen. Bernie Sanders (I-Vt.). "Mr. Bernanke was head of the Fed and the nation's chief economist as this crisis, driven by reckless speculation, developed. Tragically, like the rest of the Bush administration, he was asleep at the wheel during this period and did nothing to move our financial system onto safer grounds."

Republicans say they'll focus their questioning on the transparency of the Fed's actions and the distribution of Wall Street bailout money.

"I hope Chairman Bernanke comes to his confirmation hearing with a definitive, concrete plan to bring about an end to these massive bailout programs," said Sen. David Vitter (R-La.). "If he's going to be reappointed, Mr. Bernanke needs to dedicate his second term at the Fed to ending that dangerous approach."

 

And some Republicans see a political opening to take on the Obama economic agenda.

"Chairman Bernanke's confirmation hearing will be an opportunity for the chairman to provide greater transparency on the actions the Fed has taken, and greater insight into the cumulative impact the administration's trillions in new spending, borrowing, and debt will have on the American taxpayer, said Senate Minority Leader Mitch McConnell.

Sen. Jim Bunning (R-Ky.), Bernanke's biggest critic, promises to provide some serious color -- and a "no" vote -- at the confirmation hearing.

"I am very disappointed that President Obama has decided to nominate Ben Bernanke to continue as Chairman of the Federal Reserve. This is just more evidence that the president has no clue what he is doing when it comes to the economy and solving America's fiscal problems," said Bunning. "Chairman Bernanke is part of the problem, not the solution."

Democrats say they will be on guard against any Republican effort to politicize the hearings.

"There are legitimate criticisms of the Fed, particularly that it dropped the ball for years on consumer protections," said Sen. Chuck Schumer, a Democrat on the committee. "But Chairman Bernanke's confirmation hearing should not be used as a stage by those with wrongheaded political agendas like trimming the Fed's independence."

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