Ben Bernanke was confirmed by a 16-7 Senate Banking Committee vote to lead the Fed for a second four year term. Next steps will be in January. Some details from Reuters below as well as additional comments:
The Senate is not expected to take up Bernanke’s nomination for a second four-year term at the helm of the U.S. central bank until after it reconvenes after a holiday break on January 19. While approval is widely expected, Bernanke faces an unusual amount of opposition. Bernanke’s current term expires on January 31, although he could continue to serve as acting chairman even if the Senate fails to approve him by then.
Senate ‘no’ votes may exceed the record held by former Fed chair Paul Volcker in 1984. As we noted last week, Volcker was dealing with unprecedented inflation levels during his term leading up to 1984 and hiked rates massively to fight the inflation. That was the biggest monetary policy crisis the U.S. had seen since the credit crunch. Volcker’s legacy is that of a hero for what he did, providing more proof that longer-term market cycles are usually misunderstood by politicians who make decisions based on how it will serve them in election cycles.