Wednesday, November 16, 2005 - Page updated at 12:00 AM

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Senate committee OKs Bernanke to replace Greenspan

The Associated Press

WASHINGTON – Ben Bernanke moved a step closer today to becoming the next chairman of the Federal Reserve, a job where he'll wield much power over the financial fortunes of investors big and small.

The Senate Banking Committee, by voice vote, favorably recommended his confirmation to the full Senate. Considered one of the country's leading economic thinkers, Bernanke is expected to get a positive vote there as well. The timing of when that will happen was still being nailed down.

Sen. Jim Bunning, R-Ky., was the only senator present voicing opposition to Bernanke. Bunning cited concerns that the nominee would be too much in the mold of Greenspan and not a sufficiently independent thinker.

Bernanke, 51, is a former Princeton professor and Fed governor who now serves as chairman of the White House Council of Economic Advisers. Lawmakers and the administration are wasting no time on his nomination because they want him ready to take over when the 79-year-old Alan Greenspan retires Jan. 31 after 18-plus years at the helm.

"Dr. Bernanke is eminently qualified and a superb choice for the nomination of Federal Reserve chairman," said Banking Committee's Chairman Richard Shelby, R-Ala.

Sen. Chuck Schumer, D-N.Y., said Bernanke enjoys "broad bipartisan support" and that he "has the potential to follow in the footsteps of the giants like Paul Volcker and Alan Greenspan."

The choice of Bernanke is seen as a safe one for Bush, whose job approval ratings are at a low ebb.

Bernanke would lead the Fed at a time when the economy faces challenges, including bloated budget and trade deficits and worries about whether the high-flying housing market will crash. There also are concerns about high energy prices and the lackluster jobs market.

The panel vote came one day after Bernanke, in a poised performance, offered the committee his insights into a wide variety of economic issues during a three-hour hearing on his nomination.

Bernanke told senators Tuesday that if confirmed he will not veer dramatically from the policies of Greenspan and would make sure the Fed remains free from political influence.

He also said he would move slowly and seek to build a consensus on the notion of inflation targeting — that is, numerically spelling out acceptable bounds for inflation. That's one area where he and Greenspan differ. Bernanke supports a numerical inflation target, Greenspan doesn't.

Copyright © 2005 The Seattle Times Company


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