The senate on Thursday confirmed Ben Bernanke for a second term as chairman of the Federal Reserve. The vote came after quite a bit of fuss about “bank bailouts” and one attempted filibuster and represents the closest confirmation vote ever for a Federal Reserve chairman.

Americans are upset about what they feel was a bailout of irresponsible banks and their senators brought that message to Washington, with Senator Jim Burning (R-Ky) claiming that “A vote for Ben Bernanke is a vote for bailouts.”

While I understand Senator Burning’s comment, I don’t agree with it, or just about any other opposition to confirmation of a second term for Bernanke. By the time Bernanke took over the Fed in 2006, the housing crisis was already far past the point of no return. That may not be known to most Americans, but it’s absolutely clear to any of us who were waist-deep in the real estate and mortgage businesses and saw the foundation being laid for the current state of the economy as far back as 2000. Mortgage lending in the United States came to a screeching halt in 2007; it’s unlikely Bernanke could have done much to avert the crisis, even if he’d recognized and began implementing counter measures his first day in office. That said, Bernanke takes responsibility for not recognizing the extent to which the problem had grown by the time he took office and for not acting sooner.

What many Americans, and of course their soon-to-be-up-for-re-election Senators are upset about is what they perceive as Bernanke’s “bailout” of the very same banks that got us into this mess in the first place. While I absolutely agree that banks shouldn’t be “bailed out” when they take actions that lead to their own demise, I can’t agree that the actions the Fed took in early 2009 could be considered a bailout of those irresponsible banks. Did those banks get something they probably didn’t deserve? Sure. But the bottom line is that the extent of the economic damage would have been far worse had we allowed those banks to fail.

There were a lot of regulation problems that allowed those banks to get as large as they did and to be in a position to drag down the economy in the event they failed, but the stage was set long before Bernanke took office. His so-called “bailout” of wall street was really just the lesser of two evils…either let those banks fail and plunge the economy even deeper into financial meltdown or prevent those banks from failing and lessen the blow.

I’ve heard Bernanke say that he didn’t like the choices that were available to him at the time, but he feels the Fed took the correct action considering it’s options; and I have to agree with him.

All we can hope moving forward is that there are regulations put in place that prevent such a situation from happening in the first place. But as far as Bernanke’s performance goes, I think he made the best choices considering his options at the time and any senator who claims Bernanke didn’t act in the best interest of our economy either is either completely clueless about how the economy works or is pandering to his constituents for re-election.

Source: MSNBC

Popularity: 2% [?]