UPDATE 1-FED FOCUS-Hawks to test Bernanke consensus in 2011

(Adds poll showing most dealers expect QE expansion)

By Mark Felsenthal and Ann Saphir

WASHINGTON/CHICAGO Nov 5 (Reuters) - Ben Bernanke should be able to achieve consensus if he thinks the U.S. economy needs more help next year, even though contrarians at the U.S. central bank are set to gain more clout.

The Fed chairman's college-seminar leadership style has permitted the airing of unusually diverse and strongly held views among policymakers, both behind closed doors and in public.

Disagreement about what the Fed should do is to be expected given the economy's troubling post-crisis doldrums and the central bank's aggressive and unorthodox actions.

Still, the volume of the debate, which might get even louder now that U.S. job creation appears to be picking up, has been striking and a sharp departure from the days when Alan Greenspan led the Fed with his more autocratic style.

"At one point, I felt like I was watching a Fed reality TV show -- the 'Jersey Shore' at 21st and C Street," said Julia Coronado, chief North American economist for BNP Paribas in New York, referring to a popular television program about bickering hipsters and the Fed's street address in Washington.

Despite the cacophony, the mild-mannered former professor was able to win support this week for a $600 billion asset purchase program to jolt the sluggish recovery into higher gear. Only one Fed official dissented, Kansas City Federal Reserve Bank President Thomas Hoenig, who will no longer be a voter in 2011.

Many leading economists expect the Fed to expand its new asset purchase program as the U.S. unemployment rate dips only marginally by mid 2011, a Reuters poll found on Friday. [ID:nN0599803]

HAWKISH ROTATION

Next year, when a new bevy of regional Fed presidents rotate into voting seats on the policy-setting committee, the central bank chief may find opposing voices growing louder. Some think it will be harder to pursue easy money policies should the recovery gain little traction, or even flag.

"We are likely to see three dissenters next year," said Allan Meltzer, a Fed historian and Carnegie Mellon professor.

The Fed cut interest rates to near zero in 2008 and followed that with $1.7 trillion in asset purchases to support the economy. When the recovery appeared too weak to generate recovery in job markets, the Fed laid groundwork for further stimulus, a plunge it took on Wednesday.

Dallas Fed President Richard Fisher, Minneapolis Fed President Narayana Kocherlakota and Philadelphia Fed President Charles Plosser have all questioned further monetary easing, and all three will be voters next year.

While three votes fall well short of a majority on the 12-vote Federal Open Market Committee, they could pose a big challenge to Bernanke's leadership. A Fed chairman has not faced three dissenting votes since November 1992.

"It matters because it's visible," Meltzer said. "We know that Fisher and Plosser and several others are unhappy with the policy, but it's a different thing when it comes out."

Fed policies supported by a strongly split vote could be seen as more tentative and to have less staying power than policies that get the full backing of the FOMC, he said.

MUTINY IN THE BOARDROOM?

Paul Volcker, now an outside economic adviser to President Barack Obama, brought inflation under control through unpopular policies that precipitated an open revolt on the Fed's board of governors that nearly forced his resignation.

However, analysts do not foresee Bernanke facing a similar rebellion and warn it would be a mistake to view the former Princeton professor's democratic manner of running the Fed as indicating weaker control over policy outcomes.

"Bernanke is a strong leader internally and has strong views and a rationale, and is able to martial consensus when it's needed," said BNP Paribas' Coronado.

Many see dissenting views -- and public expression of them -- as an offshoot of the give-and-take Bernanke encourages to enable panel members to think through difficult decisions and become comfortable with outcomes as they explore uncharted territory.

"Bernanke's interest in consensus building is not just an aspect of his personality but also his intellectual approach -- understanding why others have reached their positions and make sure he's assimilated it all to ensure he's made the right choice himself," said James Hamilton, an economics professor at the University of California at San Diego.

"It's the nature of the beast. He and everyone on the FOMC wants to be very careful that they've evaluated the risks and the potential benefits before they go ahead," Hamilton said.

Bernanke's cause may also be helped by some of his supporters being more assertive at the microphone.

New York Fed President William Dudley's insistence on Oct. 1 that conditions of high unemployment and below-desirable levels of inflation were unacceptable helped solidify market expectations that Fed easing was imminent. Unlike other regional Fed bank presidents, Dudley is a permanent voter on the policy-setting panel.

Likewise, Chicago Fed President Charles Evans' endorsement of easing showed further action had strong backing. Evans becomes a Fed voter next year.