President Barack Obama announced last August he would nominate Ben Bernanke to serve another term as Federal Reserve Chairman. In the last week, since Republican Scott Brown’s victory in the Massachusetts Senate election, senators of both parties have loudly announced they would oppose his nomination. Stock markets took a dive at the end of last week largely because (or so stock market observers told us — plausibly, I think) of doubts that Bernanke would be confirmed. His term as chairman ends January 31, and the prospect of the Fed having no confirmed chairman certainly could be unsettling to players in the financial markets.
This is one of those issues (like the votes on TARP in September and October 2008) in which the White House must call on members of both parties with safe seats to vote for a bill or nomination which could easily be demagogued by political opponents of both parties. Speaker Nancy Pelosi’s failure to line up many safe-seat Democrats (especially from her home state of California) resulted in TARP failing in the House on September 29, with disastrous results in the financial markets. The Senate passed a somewhat different TARP bill on October 1, and the House—with Pelosi this time whipping some of her safe-seat members—passed it on October 3.
