Shortly before the markets closed on Friday, concerns over Bernanke led to a sell off in US stocks and a decline in the US dollar. Obama had previously renominated Bernanke to be chairman of the Federal Reserve, but the Senate still must vote to approve him. Concerns came when several senators voiced their dissatisfaction with Bernanke and expressed they were either undecided or would not vote for Bernanke.
There are different reasons for dissatisfaction with Bernanke among the American people and senators. Some blame Bernanke for not seeing the crisis coming until it was already unfolding. Some fault Bernanke for the secrecy involved in the bailouts, not disclosing what institutions received taxpayer money and what the terms of the agreements were. There is a move within Congress to allow for full audits of the Federal Reserve, which Bernanke is against, and some senators are stating they will not vote for Bernanke until that audit bill is passed. Other senators are split on whether Bernanke did too much or too little in response to the crisis.
Over the weekend however, Bernanke garnered some additional support and the Senate Republican leader stated that he believed Bernanke would be reconfirmed. Expectations are now that he will be reconfirmed. There is some speculation, as reported on CNBC, that Bernanke met with some senators and in order to win them over may have promised further easy monetary policy.
Bloomberg is reporting that “31 said they would vote for Bernanke or were leaning in his favor, while 17 were opposed or leaning against him and 30 were undecided.”
US stocks rebounded on the open this morning due to confidence in Bernanke being reappointed. The USD has been flat however. If it comes into question again this week, look for US stocks and the US dollar to decline once again due to uncertainty. It is unclear who the main candidates would be to fill Bernanke’s seat. Of course, if Bernanke is reappointed, still look for the US dollar to decline medium to long term as he is set on keeping rates very low for a significant period of time.
