UPDATE:Sen Banking Panel Members Voice Support For Bernanke
(Updates to add quotes, details and background)
By Corey Boles and Luca Di Leo
OF DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- A pair of Republican members of the U.S. Senate
Banking Committee said Tuesday they would support Federal Reserve Chairman Ben
Bernanke for a second term at the helm of the central bank.
Sen. Judd Gregg (R., N.H.), a key minority party member, said he was a strong
supporter of how Bernanke had handled the economic meltdown.
"He was a dynamic force at a difficult time for the country," Sen. Mike
Johanns (R., Neb.) said of the Fed chairman.
Bernanke is likely to get tough questions at a confirmation hearing Thursday
for the Fed's handling of the financial crisis.
The Fed chief's term officially expires Jan. 31, 2010.
"We would be in dire straights as a nation and the world if he hadn't been
there to step in and take some very significant and creative approaches to
stabilizing the financial industry," Gregg said.
Since the end of 2007, Bernanke's Fed has slashed interest rates to near zero
and pumped more than $1.0 trillion into the economy to counter the economic
downturn.
Gregg said he believes Bernanke is "sensitized" to the need to gradually
withdraw the liquidity provided by the Fed to the financial system during the
crisis last year, so as to avoid the risk of inflation as the economy recovers.
The Republicans were joined by two Democrats who sit on the banking committee,
both of whom also endorsed Bernanke for a second term.
Sen. Jack Reed (D., R.I.), a senior member of the panel, and Sen. Mark Warner
(D., Va.), the former governor of Virginia who is in his first year in the
Senate, said they would vote in favor of Bernanke's renomination.
Warner, however, said he doesn't agree with the approach favored by Bernanke
or the Obama administration about how an overhaul of the financial regulatory
system should proceed.
The Fed chief, along with Treasury Secretary Timothy Geithner and prominent
House Democratic lawmakers, would retain a strong role for the central bank in
supervising the banking sector.
Warner prefers the approach outlined by Senate Banking Committee Chairman
Christopher Dodd (D., Conn.), before whom Bernanke will appear Thursday, which
would strip the Fed of its powers to supervise banks.
Bernanke has repeatedly said the Fed needs to keep its regulatory power over
banks to be able to conduct monetary policy adequately.
In the Sunday edition of The Washington Post, Bernanke said proposals to
curtail the central bank's powers would hurt the economy.
Both houses of Congress are considering proposals to overhaul financial
regulation that would dramatically alter the Fed's role.
A third Democratic member of the panel, Sen. Jon Tester (D., Mont.), said he
hadn't decided whether he would support Bernanke for a second term as Fed
chairman.
-By Luca Di Leo and Corey Boles, Dow Jones Newswires, 202-862-6682;
Luca.Dileo@dowjones.com
(END) Dow Jones Newswires
12-01-091421ET
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