Support builds for Bernanke as end of term looms

Federal Reserve Chairman Ben Bernanke looks up during his meeting with Senator Dick Durbin (D-IL) to discuss Federal Reserve policy and Bernanke's upcoming confirmation vote Capitol Hill in Washington January 25, 2010.

WASHINGTON (Reuters) - Ben Bernanke's prospects for a second term as Federal Reserve chairman brightened on Tuesday as a number of previously undecided senators voiced their support with a deadline looming.

A Reuters poll found 43 senators were likely to support Bernanke, whose four-year term as Fed chief expires on Sunday, with 19 opposing him. Senate Democratic leader Harry Reid said a vote could come on Thursday or Friday.

"We are confident that we will have the votes when it comes time to confirm Bernanke," a Democratic aide said.

The growing support suggested Bernanke would survive the shock waves that went through the Democratic party when a Republican won a stunning upset in a Massachusetts Senate race last week largely because of voter anger about the economy.

Bernanke was in jeopardy of becoming the fall guy, but a push by the White House and Senate allies has slowly coaxed undecided senators into the Fed chairman's column.

Even so, the former Princeton University professor looked certain to draw a record number of "no" votes for a nominee tapped to head the U.S. central bank.

Bernanke will have to attract 60 votes in the Democratic-controlled chamber to overcome efforts by some lawmakers to block his nomination. If he clears that procedural hurdle, a simple majority of 51 could confirm him.

Senate Republican leader Mitch McConnell repeated his expectation that Bernanke would be approved with support from both political parties. Senator John Thune, a member of the Republican leadership, said he expected more than 12 Republicans to vote for Bernanke.

If the Senate fails to act in time, Fed Vice Chairman Donald Kohn appears poised to take over leadership of the central bank on an acting basis.

BAILOUT ANGER

Bernanke's confirmation had seemed assured until the Massachusetts election reshaped the political calculus.

Public ire at the financial bailouts the Fed helped lead even as the U.S. unemployment rate was climbing into in double digits has made a potent political brew for senators facing re-election in November and has undercut support for Bernanke.

The Fed chief had actively sought to salvage his nomination in meetings with senators, but Tuesday afternoon he turned from politics to policy, chairing a long-planned two-day meeting of Fed officials to plot interest-rate strategy.

While Bernanke, who was first named to the Fed chairmanship by President George W. Bush, has been credited with capably steering the U.S. economy through the worst financial storm in decades, he is under fire for the Fed's hands-off regulatory and easy money policies that preceded the meltdown.

"Politicians are casting around for a boogeyman that they can point a finger at," said Stephen Stanley, chief economist at RBS Securities in Stamford, Connecticut. "The timing of Bernanke's reappointment vote could not have come at a worse time."

A senior Fed official warned that Bernanke's rocky path to confirmation suggests a worrisome attempt to exert political influence over the decisions of the central bank.

"The impulse to use Mr. Bernanke as a political punching bag raises the specter that, instead of doing the right thing, Congress may seek to pressure the Fed to print its way out of this crisis," Dallas Federal Reserve Bank President Richard Fisher wrote in the Wall Street Journal.

Fisher said if the Fed were to succumb to pressure to print more money than economically wise, inflation would ensue.

Bernanke became a Fed board member in 2002 and later served as a White House economic adviser before Obama predecessor George W. Bush tapped him to head the central bank as chairman. President Barack Obama selected him for a second term in August, praising him for his efforts to buffer the economy from the financial crisis.

(Additional reporting by Susan Cornwell, Donna Smith and Pedro da Costa in Washington, and Kristina Cooke in New York; Editing by Kenneth Barry)