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Monday, August 24, 2009

Obama to Reappoint Bernanke

by Calculated Risk on 8/24/2009 10:13:00 PM

From CNBC: Obama to Reappoint Bernanke as Fed Chief

U.S. President Barack Obama will reappoint Ben Bernanke for a second term as chairman of the Federal Reserve on Tuesday, a senior administration official said on Monday.
"The man next to me, Ben Bernanke, has led the Fed through one of the worst financial crises that this nation and this world have ever faced," Obama will say in a statement to the media at 9 am New York time.
As Fed Governor Bernanke supported the flawed policies of Alan Greenspan - he never recognized the housing bubble or the lack of oversight - and there is no question, as Fed Chairman, Bernanke was slow to understand the credit and housing problems. And I'd prefer someone with better forecasting skills.

However once Bernanke started to understand the problem, he was very effective at providing liquidity for the markets. The financial system faced both a liquidity and a solvency crisis, and it is the Fed's role to provide appropriate liquidity. Bernanke met that challenge, and I think he is a solid choice for a 2nd term (not my first choice, but solid).