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WASHINGTON (AP) – The top Democrat in the Senate has endorsed Ben Bernanke for a second term as chairman of the Federal Reserve.
Majority Leader Harry Reid says the Fed will have to do more to help struggling homeowners keep their homes and urge banks to lend to small businesses.
The Nevada Democrat’s endorsement was a welcome sign for Bernanke since more and more senators in both parties have announced opposition to Bernanke or said they are undecided. Reid raised eyebrows on Thursday after issuing a statement that failed to endorse Bernanke.
Democrats had sharply criticized Bernanke for failing to police high-risk mortgages and missing the housing bubble.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.
WASHINGTON (AP) – Federal Reserve Chairman Ben Bernanke faced mounting Senate opposition for another four-year term Friday, even as the White House described President Barack Obama as confident about his confirmation.
Four Democrats say they will vote against Bernanke on the Senate floor. And at least two senators who voted for Bernanke in the Senate Banking Committee last month are weighing their support.
Many others have not made their inclinations known, suggesting a vacillation in the Senate over Bernanke and his stewardship of Wall Street both before and after the financial crisis.
While no one is declaring his confirmation doomed, the emergence of opposition and the shift by some to undecided illustrate just how difficult the terrain has gotten for Obama, especially since a Republican Senate victory in Massachusetts this week.
The roster arrayed against him grew Friday, with Democratic Sens. Barbara Boxer of California and Russ Feingold of Wisconsin announcing their opposition.
“It is time for a change – it is time for Main Street to have a champion at the Fed,” Boxer said.
Sen. Jeff Merkley, D-Ore., who opposed Bernanke in committee, also said Friday he was opposing Bernanke’s nomination. He blamed Bernanke not only for missing signs of the smoldering crisis. “Ben Bernanke helped set the fire,” Merkley said on Friday.
Democrat Byron Dorgan of North Dakota announced Thursday he would oppose Bernanke on the Senate floor.
White House deputy press secretary Bill Burton, talking to reporters as Obama headed to Ohio Friday, said the president has “a great deal of confidence” in the actions Bernanke already has taken and believes he’s “the best person for the job.”
Burton said the White House still believes that Bernanke, 56, will get enough votes in the Senate to run the nation’s central bank for another four years.
Behind the scenes on Friday, the White House worked aggressively to keep Bernanke’s nomination afloat, with Obama chief of staff Rahm Emanuel and Treasury Secretary Timothy Geithner on the phone throughout the day to key senators to shore up support, said two senior administration officials, speaking on condition of anonymity to more freely discuss behind the scenes activity.
The administration’s concerns about the status of the nomination also lessened somewhat, despite the Democratic defections, by the knowledge that several Republicans were committed for Bernanke, one official said.
Bernanke faces a 60-vote Senate hurdle because Sen. Bernie Sanders, an independent liberal from Vermont, has placed a “hold” on the nomination, meaning it will require a super-majority to confirm him.
The political waters have been getting rougher for Bernanke, and the Senate confirmation vote may be much tighter than many had anticipated just a month ago. Counting votes against him in committee, Bernanke has at least 10 senators publicly against him.
Bernanke has no real Senate constituency with either party because he was appointed to his first term by President George W. Bush but is now closely linked to Obama’s economic policies.
A spokeswoman for Sens. Sherrod Brown, D-Ohio, who voted for Bernanke in committee, said he is now undecided. And Sen. Bob Corker, R-Tenn., one of four Republicans to side with Bernanke in committee, said that while he wants to support him and is carefully examining Bernanke’s record, “I do reserve the right to vote against him” – a view he expressed in committee last month.
Corker said a strong argument for Bernanke is that he is best equipped to mop up massive amounts of money pumped into the economy during the crisis to avert another dangerous problem: an outbreak of inflation.
“On the other hand, at some point you have to weigh that against the fact that regardless of what he’s done, even if everything he’s done has been perfect, you’ve got to understand that trust that the public has in the Fed today has been greatly diminished by the activities that have taken place over the last couple of years,” Corker said in an interview.
A time for a vote still hasn’t been set. Officials at one time had hoped that it would come this week. Bernanke’s term expires on Jan. 31.
Don Stewart, spokesman for Senate Republican leader Mitch McConnell of Kentucky, said that Democrats had asked GOP leaders to measure support among Republicans. “We didn’t think we’d even have to count,” Stewart said.
If Bernanke is not confirmed before his term expires, Fed Vice Chairman Donald Kohn would probably step in as chairman and run the central bank on a temporary basis.
Just days after losing their filibuster-proof Senate majority in a Massachusetts special election, Senate Democrats are searching for a way to defuse voter anger that the economy remains sluggish and is recovering slowly from a recession that was as harsh as any in decades.
While praised for preventing the recession from turning into another depression, Bernanke’s support of Wall Street bailouts – especially the $182 billion rescue of insurance giant American International Group Inc. – has touched a nerve on Main Street.
“The whole AIG issue – you’d have to be asleep not to know that that has certainly clouded the issue,” Corker said.
Bernanke and Sen. Majority Leader Harry Reid, D-Nev., met Thursday to discuss ways to strengthen the economy, encourage more lending by banks and curb home foreclosures. Reid hasn’t said where he stands.
Sen. Daniel Akaka, D-Hawaii, who also supported Bernanke in committee, still backs the Fed chief. So do Jon Tester of Montana and Mark Warner of Virginia.
The Senate Banking Committee in mid-December sent Bernanke’s nomination to the Senate floor on a 16-7 vote. Six Republicans and one Democrat – Merkley of Oregon – lined up against him.
Associated Press writers Andy Taylor, Laurie Kellman, Jennifer Loven, and Al Fram contributed to this report. Philip Elliott reported from aboard Air Force One.