On Thursday, the Senate approved the nomination of Ben Bernanke to chair the Federal Reserve by a vote of 77-23. His confirmation nonetheless drew a record-breaking level of opposition, four years after he easily passed through the Senate. Seven lawmakers voted to end the filibuster then pivoted to vote against the confirmation itself, which required a simple majority. Two noteworthy ‘no’ votes on the Democratic side: Sens. Barbara Boxer (D-Calif.) and Arlen Specter (D-Pa.), who both face difficult reelection fights. Some have speculated that the closer than expected vote may make it harder for Bernanke to defend the Fed as Congress prepares to intensify its oversight of monetary policy and curb the Fed’s authority over the banking system.
As the Senate works towards a “jobs bill” expected to be released next week, disagreement remains among Democrats as to what the bill should include. The House already passed a $154 billion stimulus plan in December, including an expansion of unemployment and health-care benefits, as well as new infrastructure spending. Senate Democrats have met resistance from moderates who object to such a high cost. Senate Majority Leader Reid is expected to announce a new proposal next week incorporating ideas from the Administration including shifting $30 billion from TARP and sending it to community banks for lending.
Geithner Testifies on AIG
During testimony and questioning Wednesday before the House Oversight and Government Reform Committee, Treasury Secretary Timothy Geithner defended his own performance and the actions of federal officials during the financial crisis more generally. “I was there; I know what I was responsible for. I take full responsibility and take great pride in those judgments,” Geithner said in testimony. “I hope you will give the same care and judgment to looking at those decisions in retrospect and with benefit of hindsight that we gave in making those decisions at the time.”
Fed Votes on Short-term Interest Rates
On Wednesday, the Federal Reserve’s policy-setting committee voted to keep short-term interest rates near zero, but it offered a slightly more optimistic assessment of economic activity than it had in December. The committee also reaffirmed that it still intends to wind down one of its most extraordinary interventions in the markets in recent years, namely its purchase of $1.25 trillion in mortgage-backed securities by the end of March.
Senate Defeats Debt Panel; Obama Pledges Creation
On Tuesday, the Senate failed in its effort to create a bipartisan deficit reduction commission. Fifty-three Senators voted for the plan and forty-six against, it needed sixty votes to be approved under Senate rules. President Obama subsequently proposed to establish a similar panel by executive order in his State of the Union address on Wednesday. The alternative panel will be tasked with proposing recommendations to reduce annual budget deficits and slow or reverse the growth of the national debt, with instructions to conclude their work by December 2010. Unlike the commission proposal killed by the Senate, however, Mr. Obama’s executive order will be unable to force Congress to vote on the commission’s suggestions.
Senate Financial Regulatory Reform
Senate Banking Committee Chairman Chris Dodd (D-Conn.) is in the process of meeting one-on-one with all Committee Democrats in his effort to conclude negotiations on financial regulatory reform by early March. Former Federal Reserve Chairman Paul Volcker, who played a key role in drafting the new bank rules, will appear before the committee the afternoon of Feb. 2. Dodd is still pushing to conclude talks and move the bill to formal committee consideration by the end of February or the first week of March.