Bernanke’s Road to a Second Term Faces New Obstacles

Updated 5:46pm ET Senate Majority Leader Harry Reid issued a statement late Friday, signaling his endorsement of Ben Bernanke for a second term as Fed chairman. Here’s part of what Reid had to say about the decision:

I made it clear that to merit confirmation, Chairman Bernanke must redouble his efforts to ensure families can access the credit they need to buy or keep their home, send their children to college or start a small business. He has assured me he will soon outline plans for making that happen, and I eagerly await them.

Read the full statement here.

Tonight, we take a look at how Ben Bernanke’s road to a second term as chairman of the Federal Reserve has become a whole lot tougher this week — and it may turn out to be even more difficult in the remaining week before his term as chair ends.

In the wake of Tuesday’s election in Massachusetts and voter anger over the economy and the financial bailouts (in which Bernanke played a direct role), several Senate Democrats have come out over the last 24 hours to say they either won’t support a second term for Bernanke or are undecided about doing so.

Today, Senators Barbara Boxer (D-California) and Russ Feingold (D-Wisconsin) both announced they would not support him to be head of the central bank. Meanwhile, Senate Majority Leader Harry Reid, who met with Bernanke yesterday, distinctly avoided saying whether he would vote for Bernanke. Assistant Senate Democratic Leader Richard Durbin is also reportedly “undecided” on Bernanke.

Bernanke’s first term as chairman ends on January 31. President Obama nominated him to a second term back in August, but it is subject to confirmation by the Senate. There are no fewer than three holds on his confirmation, placed by Sens. Bernie Sanders (I-VT) , David Vitter (R-LA) and Jim DeMint (R-SC). The president, who said today that he believes Bernanke will be confirmed, needs to get 60 votes to break those holds and move Bernanke to a final confirmation vote.

“It’s closer than most people, including me, thought just a few days ago,” says the Wall Street Journal’s David Wessel, who is our guest on tonight’s program. Wessel says the move toward a more populist stance by a number of Democrats is playing a role.

That was reflected in Boxer’s announcement today.

In a statement, Boxer gave Bernanke credit for “some important steps” he took at the height of the financial crisis. But, she said, “it is time for a change – it is time for Main Street to have a champion at the Fed. Dr. Bernanke played a lead role in crafting the Bush administrations economic policies, which led to the current economic crisis. Our next Federal Reserve Chairman must represent a clean break from the failed policies of the past.”

Bernanke still has support among a number of Republicans and Democrats, many economists and much of Wall Street. And he may get enough votes when push comes to shove next week. But there are growing questions about whether there’s enough support in the Senate to give him the votes he needs in time to meet the January 31 deadline.

It’s not entirely clear what would happen if he was not confirmed. The law says that in the “absence” of the chairman, the vice-chairman serves as interim chair of the Fed. Whether or not this qualifies as an “absence,” the uncertainty would put the Fed into relatively uncharted waters by all accounts. But speculation in Washington suggests that it’s likely that the current vice-chair, longtime Fed veteran Donald Kohn, would temporarily become chairman.

David Wessel has been covering this today and will have more information tonight. I hope you can join us for Judy Woodruff’s interview.