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You've really got a hold on him

M1X00129_9.JPGBernie Sanders has placed a hold on Ben Bernanke's renomination. “If he’s the smartest guy in the world," Sanders asked, "why didn’t he do anything to prevent us from sinking into this disaster that Wall Street caused and which he was a part of?"

It's not a bad question. But it's not likely to receive much of an answer. As CQ notes, this isn't the first time a hold has been placed on the renomination of a Fed chairman. "In 1996, Alan Greenspan faced a hold from several Democratic senators — led by Byron L. Dorgan, D-N.D., and Tom Harkin, D-Iowa — after he was nominated to a third term. The senators argued that Greenspan was too quick to raise interest rates in the fight against inflation." They gave up the hold in return for "extended debate time on the nomination." Greenspan was confirmed.

In practice, the hold is a one-man filibuster. If Bernanke's supporters can round up 60 votes, they can break it. But the politics here might be more uncertain than meets the eye. The hold probably delays Bernanke's renomination through to 2010. That puts it in the middle, or right after, a hard vote on health-care reform. And given the level of anti-bailout fury in the country, and the fact that Tim Geithner doesn't need to be reconfirmed before the Senate anytime soon, Bernanke may be the sole opportunity a lot of these guys have to make a public show of fury.

That doesn't mean Bernanke's nomination is in real trouble, if for no other reason than that the Senate isn't the House, and so there's less short-term political pressure. Nor is there any consensus about who would be a better Fed chairman than Bernanke. But though the possibility of a surprise here is slim, I think it's higher than zero.

Obligatory Senate procedural rant: All that said, holds are a noxious practice and we should get rid of them.

Photo credit: Charles Krupa/AP.

By Ezra Klein  |  December 3, 2009; 10:05 AM ET
Categories:  Federal Reserve  
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Comments

Sanders is BS - if he is member of the world's most respected 'deliberative chamber' how come routinely we get policies without any serious deliberation which have literally dragged down this country to the hell (Iraq war resolution)? That Sanders probably doesn't know any god da*n things what Fed does and what Bernanke has achieved.

Having said that, the real critic of Bernanke Chairmanship is in WSJ Editorial where that editorial makes a sound argument; whether you agree or not is a different matter.

If at all we wanted accountability - it is not only Bernanke, but Geithner, Summers and Romer; all these need to resign because all of these essentially lied to us when Administration was selling the Recovery Act. Look at our unemployment today and what those guys claimed then.... Sad part is this tragedy is unlikely to vanish anytime soon. Those demographic consequences and persistent lag in employment; that is the true cost paid by this country with devastating impacts on our well being in years to come and our diminished standing with rest of the world as well.

Posted by: umesh409 | December 3, 2009 10:27 AM | Report abuse

I rise this morning in full support of the gentleman from California, our dear blogger and his continuing highlighting of the absurd practice of Senate holds, and the anti-democratic supermajority rule, not only of just final votes, but nowadays even of procedural steps along the way to a vote!!

Posted by: zeppelin003 | December 3, 2009 10:28 AM | Report abuse

I've heard Janet Yellen (SF Fed president) as a reasonable replacement- she's more tilted in her views towards full employment rather than worrying about inflation raising 0.1%. Even her nomination might be good for employment, as it signals that the administration is more serious about employment and banks might stop sitting on their money if they really thought a Fed chair who wouldn't mind somewhat higher inflation was on the way.

Posted by: _SP_ | December 3, 2009 10:52 AM | Report abuse

Simon Johnson has some good (if too polite) questions for Bernanke on economix blog:

http://economix.blogs.nytimes.com/2009/12/03/questions-for-bernanke/

I personally don't see how the captain of the ship can be reappointed after presiding over the biggest financial fiasco in our history. Appoint Elizabeth Warren or Robert Reich and give them a mandate to reform the Fed. Bernanke clearly doesn't believe it needs fixing. Hello? 1) It's too cozy with bankers. 2) It's an incompetent regulator. 3) It doesn't give a damn about its mandate to promote full employment.

Posted by: bmull | December 3, 2009 11:09 AM | Report abuse

Bernanke needs to be replaced. He was a major architect of the policies that created the crisis. He ignored signs of the severity of the developing crisis and failed to prepare for obvious dangers. Worst of all, he has turned the Fed into an off-balance sheet funding vehicle of the Treasury to circumvent Constitutionally-mandated budgetary procedures. He has fought all efforts to examine the central bank’s conduct in the rescue operation. Before, during, and after the crisis, he has put the interests of banks ahead of those of ordinary citizens. He needs to go. Tell your Representatives folks. Sign the petition:

http://stopbailoutben.com/?source=bpo

Posted by: nklein1553 | December 3, 2009 12:04 PM | Report abuse

“If he’s the smartest guy in the world," Sanders asked, "why didn’t he do anything to prevent us from sinking into this disaster that Wall Street caused and which he was a part of?"

Unfortunately, there aren't enough telephone booths around the Fed offices, thereby delaying Bernanke from changing into his Superman costume. Otherwise, he would have singlehandedly saved the worldwide financial system from an unprecedented crash. Damn the advent of cellphones!

Posted by: Jaycal | December 3, 2009 12:27 PM | Report abuse

Jaycal,

You write as though the crash as an utterly unforeseeable event and that Bernanke could have done nothing to minimize the problem before it occurred. Nothing could be further from the truth.

The crash was caused by an $8T housing bubble, excessive bank leverage, irresponsible mortgage lending (e.g. liar's loans) and unregulated derivatives. Responsible economists had been pointing to these problems since at least 2002. Yet Bernanke saw no danger. He simply continued the irresponsible practices of Greenspan.

At least Greenspan, to his credit, has issued a mea culpa, and recognized his mistakes. Bernanke hasn't. Why should we trust him going forward? Because he kept the meltdown (caused by policies he advocated and pursued) from being even worse? First, the steps who took were for the most part textbook remedies that any half competent person could have taken (throw enough money at any company and you can keep it from going bankrupt). Second, congratulating Bernanke on his rescue efforts is like congratulating the arsonist for helping to put out the fire. Do we now reappoint him as chief of the fire department? Lastly, Bernanke has resisted any effort to even tell congress in detail what he did. That's not independence, it's imperiousness.

Posted by: alex50 | December 3, 2009 2:04 PM | Report abuse

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