Senate approves Bernanke to succeed Greenspan as Fed chairman
WASHINGTON – The Senate on Tuesday approved the nomination of Ben Bernanke to be the next chairman of the Federal Reserve, the most influential economic policy job in the world.Bernanke, 52, was cleared on a voice vote after a short debate in the chamber amid strong bipartisan support.”Ben is a man of impeccable credentials, sound policy judgment and strong character, and he will make an outstanding chairman,” President Bush said in a statement. “Ben has provided wise counsel and good advice as a member of my economic team, and he will serve our nation with great distinction at the Federal Reserve.”He succeeds Alan Greenspan, 79, who retired Tuesday after 18 1/2 years, making him the second-longest serving chairman at the central bank.”We believe that Dr. Bernanke will serve this country well at the helm of the Federal Reserve,” said Sen. Richard Shelby, R-Ala., in remarks on the Senate floor before the vote.Sen. Paul Sarbanes, D-Md., observed: “There’s no question about Dr. Bernanke’s qualifications for the position. … He commands great respect from his peers in the profession and I think great respect from all who have come in contact with him.”Sen. Jim Bunning, R-Ky., was the only senator requesting to be recorded as voting against the nomination. Bunning cited concerns that Bernanke would be too much in Greenspan’s mold. “Sadly, I have not seen very much evidence of him being independent,” Bunning said.A former Fed governor and Princeton economic professor, Bernanke, chairman of the White House’s Council of Economic Advisers, was tapped by Bush in October for the Fed post.Bernanke must be sworn in before he takes over as the chairman of the Fed. A private swearing-in ceremony will take place Wednesday morning at the Federal Reserve, the central bank said in a statement.The Fed determines interest rate policies that affect any person or business borrowing money. Its decisions – along with utterances from the Fed chief – can influence financial markets around the globe.Bernanke will lead the Fed at a time when the U.S. economy faces challenges, including bloated budget and trade deficits, the question of whether the high-flying housing market will make a safe landing and the toll that high energy prices will have on business activity, household budgets and inflation.The handling of monetary policy under the Bernanke-run Fed – at least early on – is not expected to be much different from the Fed under Greenspan. Both men share a similar philosophy in terms of the importance of fighting inflation, preparing for remote but dangerous economic risks, and keeping the economy on an even keel while nurturing job creation.And, Bernanke – like Greenspan – will work to make sure the Fed remains free from political influence. That’s crucially important for the Fed to have credibility in the eyes of investors and central bankers around the world.Yet, there are certainly differences between the two in substance as well as style.Bernanke, for instance, favors numerically spelling out acceptable bounds for inflation. Greenspan didn’t, arguing that it could crimp the Fed’s flexibility.In terms of setting interest rates, an inflation target wouldn’t make much practical difference because the Fed’s preferred range of inflation under Greenspan – which wasn’t publicly announced – was 1 to 2 percent, excluding food and energy prices. That’s the same range favored by Bernanke.Bernanke, in his Senate confirmation hearing on Nov. 15, said he would move slowly and seek to build a consensus on the notion of inflation targeting.While Greenspan is known for his Delphic discourse, Bernanke is known for his plain-speaking style.The Senate’s action is the latest step in Bernanke’s journey from academic to economic policy maker.Born in Augusta, Ga., Bernanke graduated from Harvard with an economics degree and added a Ph.D. in economics from the Massachusetts Institute of Technology. He spent six years teaching at Stanford’s Graduate School of Business, 17 years at Princeton and several years as a visiting faculty member at other institutions, including MIT.”I always thought I would be an academic lifer,” he once said.Bernanke left the classroom behind when he became a Fed governor in 2002, a job he held until June 2005 when he became the president’s chief economist.