Senate majority leader Harry Reid expects to hold a vote to reappoint Fed Chairman Ben Bernanke on January 28. Bernanke needs 60 votes for a second term. Late last week, Bernanke's nomination appeared in jeopardy. But a last-minute triage operation performed over the weekend by White House and Senate Democratic leaders, along with Senate minority leader Mitch McConnell, may have saved the appointment. Expect a nail-biter, with Republicans criticizing easy money and Democrats criticizing the Fed's opacity.

Bernanke's massive increase in the money supply may have done more than the TARP and stimulus combined to pull the global economy from the brink of disaster. Yes, Bernanke may have been silly when he exonerated the Fed from responsibility for the crisis in a recent speech to the American Economic Association (see John Taylor's response here). Yes, he presided over the bubble. Yes, someone should be held accountable for the crisis. Still, Tyler Cowen makes sense (as usual!):

It would be a mistake to take out our frustrations on the Fed and its chairman. The most likely scenario, in my view, is that our economy is undergoing a long-term restructuring at the same time it is recovering from the financial crisis. If that’s the case, the ability of monetary policy to fight off unemployment is much more limited than most of our models would imply.

It’s interesting that some on the left and the right oppose another term for Mr. Bernanke as a protest against bailouts, joblessness, and politically connected banks. They have some legitimate complaints, which deserve a fair hearing. But Mr. Bernanke going down will make the problem worse rather than better.

If he fails, the only alternative would be a bland, Congress-friendly, “no track record” sort of candidate. It would be a Fed chief without any independent power base and perhaps without any private sector experience, given the recent record of U.S. banks and its unpopularity.

What’s the point in taking that kind of chance? What kind of superior replacement do you expect the Republican and the Democratic critics to agree upon? And once the Bernanke successor is in the job, it’s not clear what kind of improvements we could expect from him or her.

Like health care, the deficit commission, and the spending freeze, in my view Bernanke's confirmation troubles are more about the current political dynamic than they are about the negligence of the Fed. Bernanke has long been subject to criticism from conservatives and liberals alike, but the White House assumed the president's seal of approval would assure the chairman's re-appointment. In January 2010, however, the seal doesn't count for much. It's amazing what a special election can do.

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