WASHINGTON, Dec 17 (Reuters) - Federal Reserve Chairman Ben Bernanke is likely to pass the first hurdle in winning Senate confirmation to serve another term on Thursday but will face unusually strong opposition as his nomination moves ahead.
The Senate Banking Committee is expected to recommend his confirmation to the full Senate, which is is not expected to vote on his nomination until 2010. Bernanke’s four-year term expires Jan. 31.
Bernanke is expected to gain Senate approval, but analysts believe opposition may exceed the 16 no votes former Fed Chairman Paul Volcker drew in 1983, when he raised rates to double digits and triggered back-to-back recessions to crush inflation.
Bernanke and the Fed have become lightning rods for anger over financial excesses and government bailouts of Bear Stearns, American International Group, and support for the biggest U.S. banks during the worst crisis since the Great Depression.
With unemployment rates in double digits for the first time in over a quarter century, public resentment over the taxpayer-funded rescue of the banking sector runs high.
“We need to have leadership that understands the goal is not Wall Street profits,” Oregon Democratic Senator Jeff Merkley told Reuters on Wednesday. “The focus should be on how do you enable families to thrive and prosper.”
Merkley said he will vote against Bernanke, the first majority-party Democrat on the 23-member panel to express outright opposition to him.
Even if he wins confirmation, Bernanke faces the prospect of leading a diminished institution. The Fed itself is under attack in Congress from lawmakers who feel the institution was derelict in policing the financial firm risk-taking that set the stage for the financial collapse.
Proposals to audit the Fed’s interest rate policy decisions and to strip the U.S. central bank of its regulatory authority over banking firms entirely are under consideration on Capitol Hill in spite of Fed objections.
Bernanke has mounted an unprecedented public relations campaign for a Fed chairman to make the case the central bank’s actions in the crisis were necessary to spare ordinary Americans from deeper economic pain, giving nationally televised interviews and writing opinion articles in national newspapers.
The Fed chair may have gotten a lift on Wednesday when Time Magazine named him its Person of the Year for 2009, a high-profile distinction that credited him with saving the U.S. economy from a second Depression.
Even so, Bernanke’s political weakness was underscored in a poll earlier this month by Rasmussen Reports showing a scant 21 percent of the public support his renomination. (Reporting by Mark Felsenthal; Editing by Gary Hill)