Rehiring Bernanke is a safe move

The Fed chairman is not without critics, but beleaguered Obama chooses not to rock boat.

The Associated PressAugust 26, 2009 

— Giving Ben Bernanke a second term as Federal Reserve chairman was the politically safe course for a president beset by multiple crises and wanting no new battles.

The decision also helped soothe jittery financial markets, while drawing applause across party lines.

President Barack Obama cited the former Princeton economist's role in navigating the nation through the worst economic distress in decades in offering him a second four-year term on Tuesday. In so doing, Obama followed the pattern of other recent presidents in reappointing a central bank chief first appointed by a predecessor on grounds that he was doing a good job.

To do otherwise could have jeopardized the still-fragile recovery that Bernanke played a central role in engineering.

While other candidates were considered, including top White House economic adviser Lawrence Summers, any choice other than Bernanke might well have roiled Wall Street and touched off a fierce political battle in Washington.

"He couldn't have nominated anybody else. It would have been destructive to the financial markets, and nobody would have ever understood it," said Mark Zandi, chief economist at Moody's Economy.com.

Bernanke, 55, now faces the challenge of meeting high expectations to repair the battered economy. To keep inflation at bay, he also must tread carefully in unwinding hundreds of billions of dollars in Fed financial rescue programs once the recovery is under way.

The mild-mannered economist, who has taken some of the boldest, costliest actions of any Federal Reserve chief, does not bring heavy political baggage to the job, even though he served briefly as chairman of President George W. Bush's Council of Economic Advisers.

"I'm sure he hasn't made all the right calls, but he doesn't have a political cell in his body, and that's what you need in a Fed chairman," said Sen. Bob Corker, R-Tenn.

Although Bernanke's present term doesn't expire until early next year, Obama moved to end speculation percolating in political circles and on Wall Street.

First appointed chairman by Bush in early 2006, Bernanke has been widely praised by economists. But he has been criticized by some lawmakers for not doing more to head off the crisis, and by others for doing too much to combat it with what some see as an overly accommodating monetary policy.

He also drew criticism, along with former Treasury Secretary Henry Paulson, for strong-arm tactics in pressuring Bank of America to acquire the failing Merrill Lynch & Co.

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