The recent question of whether Ben Bernanke, the chairman of the Federal Reserve, would stay or leave has become a focal point of attention from all sides. Last night, Beijing time, U.S. President Obama officially nominated Bernanke for re-election as Chairman of the Federal Reserve. Once this nomination is approved by the Senate, Bernanke will continue for another four-year term after his current term expires. Professionals believe that, at a time when the Federal Reserve is expanding its powers, Bernanke's re-election will provide him with more room to maneuver.
After being nominated by Obama, Bernanke committed yesterday to make every effort to restore market and economic stability. Bernanke's current term will end on January 31, 2010. After receiving formal nomination from Obama, the selection for the position of Federal Reserve Chairman still needs to be approved by the U.S. Senate. Obama stated that, as an expert in the Great Depression in the United States, Bernanke, with his background, temperament, courage, and creativity, has completed the task of preventing another economic depression. Obama also publicly expressed appreciation for Bernanke's measures to overcome the financial crisis and the current economic recession, and the reason Obama decided to nominate Bernanke for re-election was that he pulled the U.S. economy back from the brink of recession.
Bernanke took over the position of Federal Reserve Chairman from Greenspan in 2006, but soon faced a once-in-a-century financial crisis. In many previous surveys, the financial market gave high scores to Bernanke's actions in response to the financial crisis, and his re-election had long been expected by the market. New York Democratic Senator Schumer also stated that without Bernanke's decisive action, the U.S. economic recession might have already been quite severe. Christopher Dodd, Chairman of the Senate Banking Committee, stated that Obama's reappointment of Bernanke as Federal Reserve Chairman was a correct decision and sent the right signal to the market, but there would still be an in-depth and comprehensive confirmation hearing.
There are also analysts who say that the U.S. economy remains weak, and there are divisions within the Federal Reserve on when and how to implement the "exit strategy." Changing leaders now would create enormous disruption for both the U.S. economy and the Federal Reserve. Therefore, Bernanke is undoubtedly the best candidate for the position of Federal Reserve Chairman under the current circumstances.
In combating the financial crisis, Bernanke made full use of the Federal Reserve's statutory powers and introduced a series of measures, including drastically lowering interest rates, providing assistance to Bear Stearns and American International Group (AIG), and supporting former Treasury Secretary Paulson's $700 billion troubled asset relief plan.
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The Federal Reserve previously refused to provide the names of financial institutions receiving loans and disclose loan amounts, insisting that the disclosure of information might harm the competitive position of these financial institutions and could trigger bank runs. Florida Democratic Congressman Grayson said that although the Federal Reserve is an independent agency, it cannot deprive taxpayers of their right to know, and the Federal Reserve must take responsibility for its decisions. Previously, Grayson proposed that the $301 billion asset guarantee provided by the U.S. government to Citigroup last year to get through the bankruptcy crisis should undergo relevant audit procedures to assess whether taxpayer interests have been harmed.