Ben Bernanke & US Fed 01 (May 08 - Nov 10 )

[millionairemind]

Jan 24, 2010
Bernanke will win 2nd term
WASHINGTON - TOP-RANKING members of the US Senate banking committee voiced confidence on Saturday that embattled Federal Reserve chief Ben Bernanke would be confirmed for a second term.

Chairman Democrat Chris Dodd and the top committee Republican, Mr Judd Gregg, acknowledged media speculation in recent days over Mr Bernanke's confirmation, but said he had done an 'excellent job responding to one of the most significant financial crises our country has ever encountered'. The pair said that based on discussions with fellow senators, 'we are very confident that Chairman Bernanke will win confirmation by the Senate for a second term'. They said they support '(Mr Bernanke's) nomination because he is the right leader to guide the Federal Reserve in this recovering economy'.

President Barack Obama's administration has been scrambling to save his nomination in the face of opposition emerging from members of the president's own party. Two Senate Democrats, Ms Barbara Boxer and Mr Russell Feingold, announced on Friday they would vote against Mr Bernanke's bid to carry on after his first term ends on Jan 31.

The moves underscore a major populist shift in the political landscape since Republican's stunning Massachusetts victory ended the Democratic supermajority in the Senate.

The embattled chief's fate spilled over into Wall Street, contributing in part to a three-day slump of nearly five per cent spurred by renewed fears over the economic outlook, a tougher White House stand on banks and financial market regulation and worries over China's overheating economy. Mr Obama remains, however, confident the Senate will confirm Mr Bernanke, a White House spokesman has said, despite sharp criticism of his role in the global financial meltdown.

As many as 10 Democrats are thought to oppose Mr Bernanke, along with several Republicans. -- AFP

[millionairemind]

I expect mkts to tank worldwide big time if he does not get renominated. The markets are counting on him to provide backstop for all their wheeling and dealings

January 25, 2010
Obama urges Senate to stand by Ben Bernanke
'He has been a very steady hand. He has taken initiatives that have been important in terms of stabilising the economy'
Christine Seib in New York

President Obama remains confident that Ben Bernanke will win Senate approval for a second term as Chairman of the US Federal Reserve, despite growing opposition to the nomination, a senior White House adviser said yesterday.

David Axelrod told CNN, the news broadcaster, that Senate leaders had assured the President that they had sufficient votes to win Mr Bernanke another four years at the helm of the central bank. His first term ends on January 31.

Mr Obama contacted key senators, including Harry Reid, the Senate Majority Leader, on Saturday to check that the nomination was not being derailed by lawmakers’ increasing reluctance to reappoint a Fed Chairman regarded as friendly to Wall Street.

Mr Axelrod said yesterday: “The President is very confident. The readings he’s getting from his conversations is that Chairman Bernanke will be confirmed.”

His comments were backed up yesterday by Valerie Jarrett, another senior White House adviser, and Mitch McConnell, the top Republican in the Senate, who told the MSNBC channel that he believed Mr Bernanke would still win bipartisan support.

Mr Axelrod also defended Mr Bernanke’s handling of the financial crisis. “He’s been a very steady hand,” Mr Axelrod said. “He’s taken initiatives that have been important in terms of stabilising the economy.”

That Mr Obama felt it necessary to make the calls to Senate leaders is an indication of how tenuous Mr Bernanke’s position has become. The Democrats’ loss of Ted Kennedy’s Senate seat in Massachusetts last week was read as a rebuke to the Obama Administration for pushing through healthcare reform and failing to crack down on bankers’ bonuses.

The President further fuelled anger within the financial sector on Thursday when he announced limits on bank sizes and trading — the latest in a series of attacks that he has levelled at Wall Street. But this newly aggressive tone from the White House towards bankers has prompted some Democrat lawmakers to shy away from supporting Mr Bernanke, who is closely associated with last year’s unpopular $800 billion bailout programme.

On Friday two Democrat senators — Barbara Boxer, of California, and Russ Feingold, from Wisconsin — said that they would vote against Mr Bernanke’s nomination when the Senate was polled, possibly as early as next week. Ms Boxer said that she wanted a new Fed chairman as a “clean break from the failed policies of the past”.

Mr Obama nominated Mr Bernanke in August for another term at the helm of the central bank. The Senate banking committee approved the nomination in December, despite opposition from Republicans on the committee who blamed Mr Bernanke for failing to spot the financial crisis, being too lax in his regulation of the banks and too generous in the bailout.

Because four Republican senators have put a so-called “hold” on Mr Bernanke’s reappointment, Senate leaders need 60 “yes” votes from the 100-strong chamber simply to bring about a vote on the nomination. Once they have won the right to hold a vote, the leaders then need a straight majority to approve Mr Bernanke’s second term. Senator John Kerry said on Saturday that he would vote for Mr Bernanke, bringing the number of confirmed “yes” votes to 27.

A Dow Jones poll showed that 15 senators, including four Democrats, had vowed to oppose the Chairman’s return. The remaining 58 senators have not yet said how they will vote.

If Mr Bernanke’s appointment is not confirmed by January 31, Donald Kohn, vice-chairman of the Fed’s board, could take over in the interim.

[kennynah]

isn't this a good system.... a powerful official, the fed reserve chairman, can actually be voted out of office... he doesn't and cannot appoint his son to be the next chairman.... this is curtailing his powers...

[winston]

If the market can really crash if Helicopter Ben is not reappointed, then there's your chance to manipulate the market big time...

Short the market heavily and then choose another guy

And I'm sure some smart guy in one of the IBs has already thought about this scenario.

The more time I spent in this business, the more I realize how dirty it is...

[millionairemind]

Jan 26, 2010
White House backs Bernanke

WASHINGTON - THE White House stood firm on the renomination of Ben Bernanke on Monday, saying a second term for the Federal Reserve chief was vital to demonstrating stability in the US financial system.

'Chairman Bernanke helped the president and the economic team steer through some very turbulent times and rough waters,' White House spokesman Robert Gibbs said. 'I believe that it sends a signal to greater and overall stability to have his nomination approved without political games. And that's what we expect will happen later this week.'

Mr Bernanke's nomination, which is yet to be put to a Senate vote, appeared in deep trouble on Friday, after several Democratic senators withdrew support for his nomination amid public fury over his role in the financial crisis.

But the White House launched an emergency bid to shore up the nomination and Senate Majority leader Harry Reid and other influential senators threw their support behind Mr Bernanke.

Former Republican presidential candidate Senator John McCain however came out against Mr Bernanke on Monday, voicing the argument of opponents to the nomination that the Federal Reserve chief did not do more to prevent the economic meltdown.

'Our country is still facing an economic crisis and while I appreciate the service that Chairman Bernanke has performed as Federal Reserve Chairman, I believe that he must be held accountable for many of the decisions that contributed to our financial meltdown,' McCain said in a statement. 'Therefore, I plan to oppose Chairman Ben Bernanke's confirmation for a new term as Federal Reserve Chairman.' -- AFP

[Aspellian]

If the market can really crash if Helicopter Ben is not reappointed, then there's your chance to manipulate the market big time...

Short the market heavily and then choose another guy

And I'm sure some smart guy in one of the IBs has already thought about this scenario.

The more time I spent in this business, the more I realize how dirty it is...

which is probably why there is an artificial support in pushing up the stock prices just before closing. higher and higher, maybe goldman will have another windfall gain next quarter!

[millionairemind]

Fed Weighs Interest on Reserves as New Benchmark Rate (Update1)
By Scott Lanman

Jan. 26 (Bloomberg) -- Federal Reserve policy makers are considering adopting a new benchmark interest rate to replace the one they’ve used for the last two decades.

The central bank has been unable to control the federal funds rate since the September 2008 bankruptcy of Lehman Brothers Holdings Inc., when it began flooding financial markets with $1 trillion to prevent the economy from collapsing. Officials, who start a two-day meeting today, have said they may replace or supplement the fed funds rate with interest paid on excess bank reserves.
http://www.bloomberg.com/apps/news?pid= ... pjlk&pos=4

[millionairemind]

Bailouts
Fed Worked to Keep AIG Deal Details Quiet
Liz Moyer, 01.25.10, 06:38 PM EST
E-mail turned over to Congress shows how central bank tried to keep confidential details about payments to banks.
http://www.forbes.com/2010/01/25/aig-tr ... ilout.html

[millionairemind]

The Fed's Anti-Inflation Exit Strategy Will Fail
Sooner or later the pressure to lend out excess bank reserves will be unstoppable.
By ALLAN H. MELTZER

Federal Reserve Chairman Ben Bernanke has explained his exit strategy to prevent future inflation. The Fed recently began to pay interest to banks on the reserves they hold in their vaults. Using this new tool, it claims the ability to get banks to keep the money instead of lending it out, thus containing the money supply and inflation.

I don't believe this will work, and no one else should.

The exit strategy is incomplete. Proponents are guilty of practicing economics without prices. They never say what the interest rate on reserves must be to get banks to hold the approximately $1 trillion of reserves above the minimum they're legally required to hold. That's the critical question.

The efforts to reduce inflation during the 1970s failed because they ended prematurely. And they ended prematurely when business, unions, Congress and the administration objected loudly to the rising unemployment accompanying higher interest rates. Today's high current and prospective unemployment rates pose a similar dilemma.
http://online.wsj.com/article/SB1000142 ... lenews_wsj

[kennynah]

banks dont make money from getting interests from fed reserve by "fixed depositing" these money ... it is their job to make money from deposits and private investments...and for the longest time, racking in billions from their treasury activities...

it is also for this reason that the latest obama's bank reforms will be a complete failure....it wont likely be passed into law.. if it did, banks wont be able to function properly anymore... remember, banks aren't charity organisations... they take your deposits and pay you interests..for what? if not to get your money to roll and invest and churn out more money...

ben bernanke must be joking or his vodka speaking when he says his idea of paying interests to banks deposits in fed reserve vaults will curb excessive lending by banks...

the shadows behind the fed reserve bank should fire ben bernanke for doing such a poor job....not being to conceal the true nature of fed reserve banks.... which is to control the US financial system...and profit from it...