Bloomberg Article Says Public Distrusts The FedSubmitted by bobbyw24 on Fri, 01/29/2010 - 09:51
Jan. 29 (Bloomberg) -- Ben S. Bernanke, who won Senate approval for a second term as Federal Reserve chairman over a record number of opponents, may now have a tougher fight against threats to the central bank itself.
Lawmakers are considering legislation to remove a shield from congressional audits of monetary policy and strip the Fed of bank-supervision powers, measures that Bernanke opposes.
The debate over Bernanke’s performance has focused lawmaker attention on the powers of the institution, said Vincent Reinhart, a former Fed official. The scrutiny comes as politicians respond to voter anger over government bailouts of Wall Street firms, including the Fed’s role in rescues of American International Group Inc. and Citigroup Inc.
“I can’t imagine that there will not be separate legislation or some piece of legislation that is the Federal Reserve Reform Act of 2010,” said Reinhart, who served as Bernanke’s monetary-affairs director until 2007.
The Senate voted 70-30 yesterday to confirm Bernanke, 56, to a four-year term starting Feb. 1, after White House officials moved to shore up support that wavered last week.
Bernanke received the most opposing votes by a Fed chairman since 1978, when the office first became subject to Senate confirmation. In 1983, Paul Volcker was confirmed for a second term by an 84-16 vote. Before 1978, the Senate voted to confirm members of the Fed’s Board of Governors, and the president picked the chairman from among them.
“The opposition to Bernanke isn’t about the guy,” said Reinhart, a resident scholar at the American Enterprise Institute in Washington. “It shows the public distrust of the institution.”