As we covered before, Ben Bernanke has been winning the long battle with public perception over his handling of the financial crisis. This morning, President Obama will announce the Fed chairman's nomination for another four-year term. After presiding over the housing bubble in 2006, the Depression scholar has won Wall Street's support for averting a total meltdown. Nevertheless, Bernanke has had a stubborn group of critics who have agitated for his ouster and replacement by Larry Summers or others.
The choice is not without its risk for Obama. Congress has grown impatient with Bernanke's aggrandizement of Fed powers, and many resent the decision to let Lehman Brothers collapse on the one hand, and the subsequent bail-outs for Wall Street firms on the other. So why did Obama bite the bullet? Cynics point out that the president is choosing this moment for the announcement to keep the news cycle off his health care woes.
Here are the best pundit reactions for why Obama took the plunge, and what comes next:
- Bernanke Got Lucky, says James Pethokoukis at Reuters. "If his term was up in January of 2011 instead, he might get more of the blame for a lackluster economic rebound. As it is, he gets credit for engineering the rebound -- and given the mood six months ago, any rebound is a good rebound. But another year of high unemployment might alter those views."
- Obama Had No Choice, argues Michael Grunwald at Time. "The Great Recession has not become another Great Depression -- the markets have rebounded, and Bernanke declared last week that the worst of the downturn appears to be over -- so Obama really had no choice but to reappoint Bernanke, even though White House adviser Lawrence Summers has yearned for the job. The markets like stability, and they really like Bernanke."
- A Tacit Agreement, grumbles the Cunning Realist. "You can be sure Obama exacted a Nixonian/Arthur Burns promise from Bernanke, either tacit or explicit, to support and monetize healthcare and whatever else comes along. The fix is in."
- It's All About the Exit Strategy, says Christopher Rupkey at the Wall Street Journal. "Having a new chairman come in at this late date would put the Fed engineered solution to both the recovery and the exit strategy at risk. The Federal Reserve made a hasty exit from easy money stimulus in the 1930s and we know how that worked out...If he can pull off this recovery that still needs nurturing, he could well go down as one of the greatest Fed Chairmen in history."
- Bernanke Got Unlucky, says Douglas A. McIntyre at 24/7 Wall Street. "Bernanke may be the beneficiary of timing, the timing of a president who is in trouble and needs good news. Bernanke may not even want to keep his job. He can make $100,000 a stop on the speaker's circuit. He can leave while he is ahead. He won't, either out of a sense of duty or because he wants to remain in the limelight instead of becoming an irrelevant old man like Alan Greenspan, circling the globe, promoting the a new book. Whatever the reason, Bernanke will be around next year and the next and will risk his repuation if the economy hits the skids again."
- Another Safe Republican, says Felix Salmon at Reuters. "Obama is following Bill Clinton's lead in reappointing a Republican Fed chairman who was appointed initially by a Republican president. In fact, by the time Bernanke's second term expires, it will have been 28 years since a Democrat, Paul Volcker, held the post. But the good news is that Bernanke isn't party-political."