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Will Ben Bernanke Become The First Casualty Of The Brown Election?

No, health care was the first casualty. But Roll Call has an incredible article up, reporting from the Senate that Ben Bernanke’s nomination for a second term at the Fed is in real trouble.

Ben Bernanke’s nomination to serve a second term as chairman of the Federal Reserve appears to be in peril. Bernanke is up for a second term at the Fed; his current term expires in 10 days on Jan. 31. A handful of Senators had previously threatened to filibuster the nomination, but this week the number of opposing lawmakers appeared to grow, further dimming his prospects for installment.

“I think it’s worthy of a review,” said Sen. Bob Casey (D-Pa.), who is undecided.

Majority Leader Harry Reid (D-Nev.) met with Bernanke on Thursday, one day after Democrats voiced concerns during their weekly policy luncheon about the nomination. In a statement after his meeting with the Fed chairman, Reid was coy, saying the two met “to discuss the best ways to strengthen and stabilize our economy.” […]

At Wednesday’s Democratic caucus meeting, according to Senators, liberals spoke out against confirming Bernanke for a second term. Those liberals tried to make the case that the White House needs to put in place fresh economic advisers to focus on “Main Street” issues like unemployment rather than Wall Street concerns. Moderates were more reserved, Senators said, but have similarly withheld their support for Bernanke.

Wow, wow, wow. We knew that today’s announcement – you could call it Glass-Steagall II – that “no bank or financial institution that contains a bank will own, invest in or sponsor a hedge fund or a private equity fund, or proprietary trading operations unrelated to serving customers for its own profit” was a big real, and represented the triumph of Paul Volcker over the more slave-to-Wall Street elements in the White House. The picture here says it all about who appears to be winning and losing, at least today, in the White House. And I hope more is on the way.

But Bernanke is a different matter. The nomination was thought to be all but done. There were a few on the right and a few on the left in the Senate against it, but despite the multiple holds it looked like Bernanke had the requisite 60 votes to overcome them. But that’s completely in doubt now. Earlier this week we saw Bernanke making concessions. He asked GAO for an audit of the AIG bailout. This was clearly a move to try and make Senators more comfortable with voting for him. As of today, it doesn’t appear to be working.

It may be because of the NY Fed/AIG email disclosure. It may be because Democrats need a scapegoat for the economy. It may be a whole bunch of things. But if Bernanke’s confirmation were on InTrade, it should be dropping like a stone.

One more thing on this – Barney Frank today said that Chris Dodd was blocking the audit the Fed amendment from his financial regulatory reform bill. But many of those trying to block Bernanke want a standalone vote on auditing the Fed before allowing his confirmation. Perhaps one is a prelude to the other.

Either way, those in line with the banksters appear to be on the run, if only for today. Populism is winning the day.

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David Dayen

David Dayen

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