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Obama Names Bernanke For Another Fed Term

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Obama Names Bernanke For Another Fed Term


Obama Names Bernanke For Another Fed Term

Obama Names Bernanke For Another Fed Term

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President Obama announced that he is nominating Ben Bernanke to another four-year term as head of the Federal Reserve. The president said Bernanke shepherded the U.S. through the worst economic crisis since the Great Depression.


From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.


And I'm Melissa Block.

President Obama took a break from his vacation on Martha's Vineyard today to conduct some White House business. The president announced he is reappointing Federal Reserve Chairman Ben Bernanke to a second term.

As NPR's John Ydstie reports, the president's choice of Bernanke today wasn't a surprise, but it wasn't always a sure thing either.

JOHN YDSTIE: Bernanke was originally appointed by President George W. Bush; that four-year term expires in January. And, in fact, right after Mr. Obama's election last November, it looked as though Bernanke might be a one-term wonder. The economy was in a tailspin. Bernanke had taken some controversial steps, like helping to bail out Bear Stearns and AIG, but letting Lehman Brothers fail. The odds makers were betting Mr. Obama's chief economic adviser, Larry Summers, might become the next Fed chairman.

But today, with Bernanke standing beside him at a school in the town of Oak Bluffs, Massachusetts, Mr. Obama painted a glowing picture of the current Fed chairman. The president said Bernanke had led the Fed through one of the worst financial crisis ever.

President BARACK OBAMA: As an expert on the causes of the Great Depression, I'm sure Ben never imagined that he would be part of a team responsible for preventing another. But because of his background, his temperament, his courage and his creativity, that's exactly what he has helped to achieve. And that is why I am reappointing him to another term as chairman of the Federal Reserve.

YDSTIE: Bernanke thanked the president for his support and offered this pledge.

Mr. BEN BERNANKE (Chairman, Federal Reserve): Mr. President, I commit today to you and to the American people that if confirmed by the Senate, I will work to the utmost of my abilities with my colleagues at the Federal Reserve and alongside the Congress and the administration, to help provide a solid foundation for growth and prosperity in an environment of price stability.

YDSTIE: The president also praised Bernanke for his bold actions and out-of-the-box thinking when faced with a financial system on the verge of collapse. David Kotok, chairman of Cumberland Advisors of Vineland, New Jersey, says that bold action may have turned the economy around, and with it, Bernanke's future at the Fed. But, says Kotok, in the early stages of the crisis, Bernanke's actions weren't particularly bold.

Mr. DAVID KOTOK (Chairman, Cumberland Advisors): Before the failure of Lehman Brothers and the events that occurred a month or two before, the Fed was operating as it pretty much had done in the past. That all changed after the crisis really became a waterfall.

YDSTIE: And as the credit freeze intensified, Bernanke became very creative, developing intricate programs to pump money into various corners of the economy. Those programs supported lending for businesses, students and mortgages, to name a few. But Bernanke went beyond domestic action, says Kotok, addressing the issue globally by engineering cooperation among central banks around the world to provide coordinated stimulus. Now, says Kotok, the challenge for Bernanke will be to coordinate the global withdrawal of that stimulus.

Mr. KOTOK: That, too, is going to require a major effort, and we'll find out if he can accomplish it. Because the time is going to come when stimulus has to be withdrawn, and if you don't do it in a coordinated way, there's a risk of a currency crisis.

YDSTIE: Bernanke's big domestic challenge will be to withdraw the massive stimulus before it boosts growth so much that it causes damaging inflation. But he's got to be careful not to do that too soon or the recovery could be choked off.

John Ydstie, NPR News, Washington.

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Obama Names Bernanke To Remain As Fed Chief

Ben Bernanke began serving as Fed chairman in 2006. Chip Somodevilla/Getty Images hide caption

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Chip Somodevilla/Getty Images

Ben Bernanke began serving as Fed chairman in 2006.

Chip Somodevilla/Getty Images

John Ydstie And Steve Inskeep Discuss Bernanke's Renomination On 'Morning Edition'

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President Obama on Tuesday nominated Federal Reserve Chairman Ben Bernanke to a second four-year term, praising the central bank chief for "bold, persistent experimentation" to bring the economy back from the brink of collapse.

The president, vacationing on Martha's Vineyard in Massachusetts, made the announcement in a move aimed at continuity as the economy pulls out of recession. It ended speculation that Bernanke might be replaced.

Obama said the Fed chief had 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 free-fall." The renomination requires Senate confirmation.

"The actions we've taken to stabilize our financial system, repair our credit markets, restructure the auto industry and pass a recovery package have all been steps of necessity, not choice. They've faced plenty of critics, some of whom argued that we should stay the course or do nothing at all. But taken together, this bold, persistent experimentation has brought our economy back from the brink. They are steps that are working," Obama said.


The president pointed to signs that the auto industry, business investment and the housing and credit markets are stabilizing, but added that "we are a long way away from completely healthy financial systems and a full economic recovery.

"That's why we need Ben Bernanke to continue the work that he's been doing and that's why I've said that we cannot go back to an economy based on over-leveraged banks, inflated profits and maxed-out credit cards," he said.

Bernanke, 55, a former Princeton University professor, was appointed Fed chairman by President George W. Bush and took office in February 2006.

At Tuesday's announcement, Bernanke thanked the president and said if he is confirmed by the Senate, he would "work to the utmost of my abilities to help provide a solid foundation for growth and stability in an environment of price stability."

The Fed, like other economic policymakers, "has been challenged by the unprecedented events of the past few years," Bernanke said. "We have been bold or deliberate as circumstances demanded but our objective remains constant: to restore a more stable financial and economic environment in which opportunity can again flourish and in which Americans' hard work and creativity can receive their proper rewards."

Bernanke has not been without detractors who say he should have acted more quickly to address the subprime mortgage and derivatives meltdowns. He has also faced criticism from both Democrats and Republicans in Congress who say his massive support to the financial industry will eventually cause a sharp increase in inflation.

In a new term, he will be faced with the difficult task of winding down massive efforts to boost the economy without choking off a recovery. Some critics say that striking that balance could prove impossible.

Even so, Democrats seemed to be lining up behind his continued tenure.

"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," Senate Banking Committee Chairman Christopher Dodd, a Democrat from Connecticut, said in a statement.

While Bernanke's job does not appear to be in any real danger, he is likely to be grilled by senators from both parties at his confirmation hearings.

Obama's announcement came on the same day as White House budget director Peter Orszag and economic adviser Christina Romer issued new budget deficit projections. They said the worse-than-expected economic crisis would result in continued high unemployment in the near term and lead to massive deficits totaling $9 trillion over the next decade.

In May, the Obama administration had predicted deficits totaling $7 trillion for 2010-2019. On Tuesday, Orszag and Romer said the economy this year will contract by 2.8 percent, more than twice what they had predicted earlier this year.

Obama hopes Bernanke can help nurse the economy back from recession even as Americans continue to lose jobs in record numbers and the housing market has yet to stage a decisive turnaround.

Meanwhile, Wall Street has given Bernanke high marks and stocks rallied after his renomination was announced, though the rise was attributed more to a better-than-expected August consumer confidence report than the Fed chief's widely anticipated reappointment.

Bernanke's study of the Great Depression is credited with helping him respond to the current crisis with programs to unfreeze credit markets and get banks lending again. He brought interest rates to zero and extended federal loans to struggling financial giant Bear Stearns and insurer AIG.

There had been talk of Bernanke being replaced by Lawrence Summers, the top White House economic adviser and a former U.S. Treasury secretary. That possibility, however, was widely viewed as presenting a conflict of interest for the Fed, which is seen as independent despite the presidential appointment of the chairman.

From NPR staff and wire reports