Obama reappoints Bernanke as Fed chairman

Written by Agencies | Oak Bluffs | Updated: Aug 26 2009, 06:29am hrs
US President Barack Obama nominated Ben Bernanke to a second term as Federal Reserve chairman on Tuesday, entrusting him with guiding the economy out of the worst downturn since the Great Depression.

Obama interrupted his vacation on the Massachusetts island of Marthas Vineyard to make the announcement with Bernanke at his side. Ben approached a financial system on the verge of collapse with calm and wisdom, with bold action and outside-the-box thinking that has helped put the brakes on our economic freefall, Obama said, with Bernanke at his side.

Bernanke pledged to work toward restoring stability to financial markets and the economy. I will work to the utmost of my abilitieswith my colleagues at the Federal Reserve and alongside the Congress and the administrationto help provide a solid foundation for growth and prosperity in an environment of price stability, he said.

Bernankes nomination for a second four-year term starting January 31 requires senate approval and was endorsed by the head of the banking committee, Christopher Dodd. The Fed chief will still face tough questioning from lawmakers who say he was slow to recognise the severity of the mortgage crisis and didnt do enough to protect American consumers while leading bailouts of financial firms including Bear Stearns and AIG.

Obamas Democrats control the Senate, but Bernanke has faced criticism from lawmakers of both parties who say he has gone too far in extending Fed support that will be difficult to unwind, threatening future inflation.

While I have had serious differences with the Federal Reserve over the past few years, I think reappointing Chairman Bernanke is probably the right choice, Dodd said in a statement. He vowed a thorough and comprehensive hearing to consider the nomination.

Obama decided to reappoint Bernanke because he wanted to keep together the team that had weathered the crisis, an administration official said. The official said treasury secretary Timothy Geithner, chief of staff Rahm Emanuel and National Economic Council chairman Larry Summers all recommended Bernanke be reappointed.

Ben Shalom Bernanke, 55, grew up in Dillon, South Carolina, where his family owned a pharmacy opened by his Austrian immigrant grandfather. He went north to Harvard University in Cambridge, Massachusetts, graduating summa cum laude with a bachelors degree in economics, then received a doctorate in economics from the neighbouring Massachusetts Institute of Technology in 1979.

A self-described Great Depression buff, Bernanke joined the central bank as a governor in 2002 after serving as chairman of Princeton Universitys economics department. President George W Bush appointed Bernanke chairman of the council of economic advisers in 2005 before naming him a few months later to the top Fed post.