I've been reading with considerable chagrin the seemingly endless well of support Obama has for Bernanke. This from HuffPo:
"'He has my strongest support. I think he's done a good job,' Obama told ABC News.
"What we need is somebody at the Federal Reserve who can make sure that the progress that we've made in stabilizing the economy continues. I think Bernanke is the best person for that job,' the president said."
I may not be the greatest of political minds, but I don't see how Obama can tap popular political sentiments by supporting Bernanke. Obama seems to be apologist-in-chief for Wall Street and its shameless plug for public aid. I don't know where the President gets his news, but he must not know that Wall Street recorded record profits and bonuses last year.
Much advantage came out of sweetheart loans and credit facilities offered by the Federal Reserve, which dwarf the $700 billion TARP. Dumping toxic debt for US Treasuries is a great money-making proposition for Friends of the Fed, a group of private bankers spearheaded by Geithner. In these exchanges, taxpayers are left holding the losses, which are socialized. The profits, meanwhile, go to Geithner's and Bernanke's cronies on Wall Street.
Obama couldn't offer a juicier political plumb to the Republicans than his enduring support for Wall Street and its agents in his administration. The more difficult the economy, the more contrasting the opulent lifestyle of the New York banking elite with the mainstream popular consciousness. As millions go jobless and homes foreclose, the Bernie Madoff-type gamblers who control the Fed's money-making machine are feeding major discontentment. The scene from Gangs of New York where the homes of wealthy Upper West Siders are raided comes to mind...
Projecting infinite support for the bankers' allies inflames nearly infinite popular rage bubbling under the surface. In the past, this anti-incumbency may have been limited to groups like the tea-baggers. Yet the Republicans have considerable experience hijacking popular movements, and could easily direct the anti-Washington emotions into a far broader political force to use against the Demos.
According to the article, McCain advocates holding Bernanke to account. The Republicans' reaction to the bailout crisis has been shrewd. They've picked at Obama's close connections to Wall Street, without directly criticizing him they can take shots at Bernanke at Geithner, who really do make ideal punching bags, being insiders. Should any attempt at in the real economy recovery fail, the Republicans will be able to blame Obama's policies as favoring the elite Wall Street bankers at expense to the general public. Rather than create distance between himself and Wall Street, Obama's become their apologist. Obama received many millions from Wall Street, and the quid pro quo has been protection for their profits through the crisis, which was a product of their unchecked greed.
Bernanke was at the heart of the creation of the mess, the creation of the housing bubble.Bernanke and his predecessor Alan Greenspan encouraged easy money policies that allowed so much capital to flow into already inflated mortgage securities markets. As chairman of the New York Fed, Geithner protected the interests of Wall Street prior to his selection as Treasury Secretary.
In one sense it doesn't matter whether Bernanke averted a larger crisis. The amount of money which flowed into privileged Wall Street firms like Goldman Sachs is a tremendous political liability. The American people are tired of being treated as second-class citizens and made to fork over billiosn for what's essentially a bankers' mistake (although of course the MSM packaged the collapse as a purely subprime phenomena--waiters getting McMansions--when in fact the derivatives trading based on mortgages was fifty times larger. Even today, the total notational amount of derivatives exceeds $260 trillion, I believe, an amount no bailout can cover in the event of default. Yes, you could argue that such a massive pile of IOUs constitutes a risk of systemic collapse, but not if the shadow banking system hadn't been created which made permissable such huge over-leveraged bets.
Already a year into his administration, perhaps Obama can no longer draw on Bush ineptness to blame for economic problems. Bush and his laissez faire regulatory policies may have helped set the circumstances that allowed mortgage fraud, but Congress--majority Democratic since '06--gutted the regulatory environment and Glass-Steagall.
Obama likely wants to keep Geithner around because their replacements create even more uncertainty, which Wall Street certainly doesn't like. It's highly unlikely that the political liability Obama created by supporting Bernanke will be worth whatever support Wall Street can provide in terms of future campaign donations. If however Obama is willing to sacrifice himself politically for the bankers, he will leave as his one-term legacy a new low in bowing to the corporate interest over his own.
So thorough has the Senate been compromised to Wall Street, I'm not sure if Bernanke can be opposed. According to another HuffPo article, through bureaucratic maneuvering Democratic Senators are lowering the bar to only 50 votes required for re-confirmation.
I am guessing a vote in support of Bernanke nomination might cost incumbents 5 points or more if they face election this year. That's assuming of course that they face populist opponents, or rivals who aren't as compromised in their loyalties to Wall Street. As we saw with Goldman Sachs, Wall Street insiders have a habit of winning no matter who wins.