Ensign comes out against Bernanke’s Fed reappointment

WASHINGTON -- Sen. John Ensign plans to vote against awarding Ben Bernanke another four years as chairman of the Federal Reserve, saying the appointee has become "far too political" to be effective.

Bernanke on Tuesday appeared to be closing in on the 60 votes necessary to secure a second term, despite the announced opposition from about 20 senators in recent days.

Democratic leaders have said they are confident that he will be reconfirmed as one of the principal engineers of the U.S. economy. The Federal Reserve, an independent body, is the nation's central bank. It manages the money supply and supervises commercial banks for soundness and safety.

Senate Majority Leader Harry Reid, D-Nev., who has said he will vote for Bernanke, set a vote for Thursday. Bernanke's current term expires on Sunday.

In coming out against Bernanke, Ensign, R-Nev., said he lost faith in the Republican economist who was appointed to lead the Federal Reserve by President George Bush in 2005.

Ensign voted for Bernanke in 2005 but said the appointee has bowed to pressure "from the powers that be" in responding to the financial crisis that exploded in 2008.

"He is far too political for our current economic situation," Ensign said.

Ensign did not explain further in a brief statement. Aides said he believes Bernanke has succumbed to pressure to adopt "easy money policies that allowed Democrats to spend so much," and has become too close to Treasury Secretary Timothy Geithner, who used to head the New York branch of the Federal Reserve.

"Our economic problems cannot be solved by simply printing money and then kicking the can down the road for future generations to solve -- that is in fact making our problems worse," Ensign said in his statement.

Bernanke had become a lightning rod for criticism of the government's handing of the financial crisis. Critics say he dropped the ball and failed to prevent the near-collapse of the economy in 2008.

Supporters said the blame for the economic calamity shouldn't fall on one person. In announcing last week that he will vote for Bernanke, Reid said Bernanke "has done a very good job putting out the fire."

Ensign said he also had questions about involvement by the New York branch of the Federal Reserve in what is being investigated as a possible cover-up.

A government inspector general is checking into allegations that the New York Fed instructed insurance giant AIG, which received $180 billion from the government, not to disclose about a dozen controversial transactions during its bailout.

Ensign said he asked to see Fed documents related to the probe but was turned down because he is not a member of the Senate Banking Committee.

"I feel strongly that before the Senate is asked to vote on this nomination, we should be allowed to see those documents," he said.

Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault@stephensmedia.com or 202-783-1760.