The good news about Bernanke
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It’s a sign of the severity of the financial crisis that Barack Obama is re-nominating Ben Bernanke as Fed chief now, in August, despite the fact that his term doesn’t end for another five months. It’s one of the few sources of potential uncertainty which the White House can address and resolve unambiguously, and it’s good that it’s happening.
Obama is following Bill Clinton’s lead in reappointing a Republican Fed chairman who was appointed initially by a Republican president. In fact, by the time Bernanke’s second term expires, it will have been 28 years since a Democrat, Paul Volcker, held the post. But the good news is that Bernanke isn’t party-political: it’s pretty unthinkable that he would ever pull a stunt like Greenspan testifying before Congress in favor of tax cuts, on the grounds that things get a bit complicated when the government reaches zero debt. (Ha!)
It’s also good news, in its own way, that Bernanke has some opposition in Congress: it’s right and normal that the Fed chief should upset lawmakers. But now that he’s been renominated (and his confirmation is a slam-dunk), maybe those noises about the central bank losing its independence might die down a little.