Congressional Record, Volume 152 Issue 9 (Tuesday, January 31, 2006)

[Congressional Record Volume 152, Number 9 (Tuesday, January 31, 2006)]
[Senate]
[Pages S348-S355]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

NOMINATIONS OF BEN S. BERNANKE TO BE A MEMBER AND CHAIRMAN OF THE BOARD
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

Mr. FRIST. Mr. President, I now ask that the Senate proceed to the
nominations of Ben Bernanke, as under the previous order.
For the information of colleagues, we will begin debate on the
Bernanke nominations now and will conclude the remaining debate after
the policy lunches.
The PRESIDENT pro tempore. I cannot hear the leader.
Mr. SARBANES. Mr. President, I suggest the absence of a quorum.

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The PRESIDENT pro tempore. The majority leader has the floor.
Mr. FRIST. Mr. President, I suggest the absence of a quorum.
The PRESIDENT pro tempore. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. SHELBY. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Burr). Without objection, it is so
ordered.
Under the previous order, the Senate will proceed to consideration of
Executive Calendar Nos. 440 and 441, which the clerk will report.
The legislative clerk read the nomination of Ben S. Bernanke, of New
Jersey, to be a member of the Board of Governors of the Federal Reserve
System.
The legislative clerk read the nomination of Ben S. Bernanke, of New
Jersey, to be Chairman of the Board of Governors of the Federal Reserve
System.
The PRESIDING OFFICER. The Senator from Alabama.
Mr. SHELBY. Mr. President, I rise this morning in support of the
nominations of Benjamin S. Bernanke to be a member and the Chairman of
the Board of Governors of the Federal Reserve System.
In November of 2005, I chaired our Banking Committee hearing
regarding this nomination, and we heard from Dr. Bernanke on a wide
range of economic issues. In reporting this nomination to the floor for
consideration, I would reiterate that President Bush has made a superb
appointment in selecting Dr. Ben Bernanke for this position.
This nomination is of great importance to our Nation and our economy.
As the central bank, the Federal Reserve has the responsibility for
conducting monetary policy to maintain maximum employment, stable
prices, and moderate long-term interest rates. As the U.S. continues to
lead the world economy, sound stewardship of the Federal Reserve also
affects the global marketplace.
The Chairman of the Federal Reserve would certainly have a big enough
job to do if he were tasked only with serving as head of the central
bank of the United States. But his job also entails the supervision and
regulation of financial institutions, including some of the largest
financial entities in the world. The Federal Reserve must ensure the
safety and soundness of these institutions and monitor any potential
for systemic risk. The American consumer also counts upon the Federal
Reserve to foster the fair and efficient delivery of services to
customers of financial institutions.
The Federal Reserve also plays a major role in operating the Nation's
payment system. Evolving technology continues to change the way we pay
for goods and services. The Federal Reserve must oversee these
innovations and adaptations and make certain the U.S. payment system is
effective, reliable, and safe.
For nearly two decades, it has been impossible to raise the topic of
the Federal Reserve without also mentioning Alan Greenspan, and I will
do so briefly here today. Alan Greenspan has been the face and the
voice of the Federal Reserve for over 18 years. Today he is chairing
his last session of the Federal Open Market Committee.
Chairman Greenspan has made a big impression on all of us--here in
Congress, our Nation, and across the world. During his tenure, the U.S.
economy and our financial system have withstood a number of significant
shocks, including the stock market crash of 1987, the Asian debt crisis
which affected capital globally, and, of course, the catastrophic
effects of 9/11, which hit the heart of the U.S. financial industry and
which affected all of us and our economy in many ways.
Chairman Greenspan also oversaw the longest economic expansion in
American history. Because of our economic success, even in the face of
great challenges, some consider Chairman Greenspan to be the greatest
central banker of all time. I commend Chairman Greenspan for his
exemplary service and dedication to our country.
Now it is time for a transition at the Federal Reserve System. As I
noted, this will be the first time in nearly two decades that the
Congress has had a new nominee before us for consideration. Certainly
stepping into Mr. Greenspan's shoes will be a tremendous challenge.
While it may seem a daunting task to follow as distinguished a
chairman as Alan Greenspan, we should be mindful of two things.
First, in 1987, many observers wondered whether an economist named
Alan Greenspan could successfully follow in the wake of the vaunted
Paul Volcker as Chairman of the Federal Reserve. Each person who sits
in the Chairman's seat has the opportunity to make that position his
own and to become a leader in his own right. That is what has been
done, in large part, due to the caliber of the men who Presidents of
the United States have chosen for the task.
Second, I would also note that many individuals who hold diverse
viewpoints on other topics are in agreement that President Bush has
selected the best possible candidate to serve as the next Federal
Reserve Chairman. Indeed, Dr. Ben Bernanke may well be the finest
monetary economist of his generation. He has both a distinguished
career in academia as well as in the policymaking arena.
The list of his experience and achievements is long. I do not have
enough time this morning to mention all of them, but I want to mention
some of his most important qualifications because his nomination
requires someone with the rare expertise that Dr. Bernanke has
acquired.
As he moves on to become the Federal Reserve Chairman, Dr. Bernanke
will be completing his duties as Chairman of the President's Council of
Economic Advisers. During his service at the CEA, Dr. Bernanke provided
the President and our Nation with sound economic advice on a variety of
significant policy issues. But before his service at the Council of
Economic Advisers, Dr. Bernanke served with great distinction as a
member of the Board of Governors of the Federal Reserve System from
2002 to 2005. This experience gives him an inside knowledge of the
Federal Reserve and the financial markets.
Dr. Bernanke has earned the tremendous respect and confidence of
policymakers in this country as well as around the world. He previously
served as chair of the economics department at Princeton University,
and prior to that tenure he was an associate professor of economics at
the Graduate School of Business at Stanford University. He also served
as a visiting professor of economics at New York University and at the
Massachusetts Institute of Technology. He was the director of the
Monetary Economics Program of the National Bureau of Economic Research.
In 1975, he received his B.A. in economics from Harvard University,
where he graduated with honors. In 1979, he received his Ph.D. in
economics from MIT.
It will be difficult to follow the long and successful tenure of Alan
Greenspan. Dr. Bernanke is an excellent choice for the job. Few
individuals have this mix of practical and academic experience,
especially his prior experience at the Federal Reserve. The Banking
Committee reviewed this nomination thoroughly, and we believe Dr.
Bernanke will serve this country well at the helm of the Federal
Reserve.
I urge my colleagues to support this nomination.
I yield the floor.
The PRESIDING OFFICER. The Senator from Colorado.
Mr. ALLARD. Mr. President, I would like to say a few words on behalf
of Dr. Bernanke. But before I do, I would like to state for the record
what a great pleasure it has been to work with Dr. Greenspan. It was an
honor to have had the opportunity to hear his testimony in committee
and to work with him on public policy issues. I wish him well as he
moves on to other endeavors. The country is forever grateful for his
service as Chairman of the Federal Reserve.
I had an opportunity to sit down and visit with Dr. Bernanke. I was
impressed not only with him personally but also with the conversation
we had and his record. He is going to bring a lot to the Fed. I join
the chairman of the Banking Committee in support of Dr. Bernanke.
Dr. Bernanke is known for his tough stance on fighting inflation.
Many expect that Dr. Bernanke's views on interest rates will be similar
to Dr.

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Greenspan's because of his stance on controlling accelerating inflation
with interest rate hikes. When I had a chance to visit with him, he
stressed the importance of communication and transparency. As Chairman
of the Federal Reserve, that is going to be a big part of his
responsibilities.
He argued that the final say on debts and deficits lies with the
President and the Congress. I couldn't agree more that we need to do
more to control deficit spending and the debts we have accumulated over
the years. Dr. Bernanke shared with me that his first priority will be
to maintain continuity with the policies and strategies established
during the Greenspan years.
We have to recognize Dr. Bernanke for what he has already
contributed. He is one of the world's leading experts on the subject of
how central banks, such as the Fed, should set interest rates and cause
the money supply to expand or contract. The combination of Dr.
Bernanke's academia, intellect, and his work for and with the Fed will
greatly facilitate his transition as the new chairman of the Federal
Reserve.
Wall Street and the investment world seemed to like the nomination of
Dr. Bernanke as the new Chairman of the Federal Reserve. The Dow Jones
Industrial was up some 169.78 points. It was the biggest 1-day point
percentage gain since last April. So the response from Wall Street has
been good.
Dr. Bernanke spent 20 years at Princeton as a professor of economics
and public affairs. He also served as the chairman of Princeton
University's economic department. Before being appointed to the
President's Council of Economic Advisors, he served as a Governor of
the Federal Reserve. His current and past positions have groomed Dr.
Bernanke and serve as an apprenticeship to succeed Chairman Greenspan.
Dr. Bernanke was widely considered one of the leading candidates to
replace Dr. Greenspan as Chairman of the Federal Reserve. I was glad to
see the President make his appointment, and I urge my colleagues to
join me in supporting Dr. Bernanke as Chairman of the Federal Reserve.
I yield the floor.
The PRESIDING OFFICER. The Senator from Maryland.
Mr. SARBANES. Mr. President, what is the parliamentary situation?
The PRESIDING OFFICER. The Senator from Maryland controls 30 minutes.
The Senator from Alabama has 18 minutes 43 seconds remaining.
Mr. SARBANES. Mr. President, I yield 2 minutes to the Senator from
Massachusetts who wishes to speak on a different subject.
The PRESIDING OFFICER. The Senator from Massachusetts is recognized.
(The remarks of Mr. Kennedy and Mr. Sarbanes are printed in today's
Record under ``Morning Business.'')
Mr. SARBANES. Mr. President, I join my able colleague from Alabama in
supporting the nomination of Ben Bernanke to be a member and Chairman
of the Federal Reserve Board of Governors. We will be voting on a 14-
year term on the Board of Governors, one of the longest terms we give
to anyone other than Federal judges in the workings of our political
system, and a 4-year term to be the Chairman of the Federal Reserve
Board.
Before I address Dr. Bernanke, I wish to take a moment, as my
colleagues have, to say a word about Chairman Alan Greenspan. Chairman
Greenspan chairs the Federal Reserve Open Market Committee that is
right now taking place. Then he steps down. He has served for over 18
years as Chairman of the Federal Reserve, the second-longest tenure in
our history, exceeded only by William McChesney Martin. There have been
occasions when I have differed with Chairman Greenspan on some of his
decisions, most notably the green light he gave to large and excessive
tax cuts in 2001 which helped to precipitate us into a serious deficit
situation. But this ought not obscure the many accomplishments and
successes during his long tenure.
Others have referenced the stock market crash which happened only a
few months after he took office; the Asian Russian long-term capital
management crisis, some 10 years later in the late 1990s; and, of
course, the 9/11 attacks in 2001. Throughout all of that, he brought a
steadying presence to the workings of the financial system and a shrewd
understanding of the situation and what needed to be done to address
it.
I commend Chairman Greenspan for bringing greater transparency into
the workings of the Federal Reserve system, something which Dr.
Bernanke has indicated he intends to continue and support, and Chairman
Greenspan's rejection of rigid policymaking, rejecting the idea that
there was a rigid formula or ideology by which you could establish a
monetary policy. In particular, he was able to push the limits on
lowering unemployment and providing jobs while still being able to
control inflation. As a result we were able to get the unemployment
rate down to levels that everyone previously had argued would lead to a
spurt of inflation. Chairman Greenspan thought that wouldn't happen. It
didn't happen. Now we have established different benchmarks in terms of
monetary policy.
Dr. Bernanke, whose nomination is before us, is no stranger to the
Senate. This is the fourth time in 3 years that we have been called
upon to consider his nomination to a very significant position. In
2002, he was nominated to serve as a member of the Federal Reserve
Board of Governors. He was renominated to that position in the
following year. In 2005, he was nominated to serve as Chairman of the
President's Council of Economic Advisers. Today, we have his nomination
to serve as Chairman for a term of 4 years and as a Governor for a term
of 14 years.
There is no question about Dr. Bernanke's qualifications for the
position to which he has been nominated. He has served with distinction
on the Federal Reserve Board from all accounts. He has had direct
experience of economic policymaking at the Council of Economic Advisers
and he has a very distinguished academic and scholarly background with
a B.A. in economics from Harvard and a Ph.D. in economics from MIT. He
has been on the faculty at MIT and at Stanford. Most recently, of
course, he was at Princeton, where he served as chair of the economics
department from 1996 to 2002, a department recognized as one of the
very best, if not the best, in the country.
He commands great respect from his peers in the profession and I
think great respect from all who have come in contact with him.
I do, though, want to take a moment to speak a bit about the
seriousness of the economic challenges we face and which Dr. Bernanke
will face as he assumes this important responsibility. We have seen the
weakest recovery in our labor market of any post recessionary period
since World War II--that is, in 60 years. While we have had some recent
improvement, compared with recoveries from previous recessions, we have
fallen well short. Furthermore, real wages have fallen over the past
few years for middle class and working Americans.
Meanwhile, U.S. economic policy has been marked by a recklessness in
its reliance on borrowing on the apparent assumption that substantial
borrowing at home and abroad can go on and on and will always remain a
continuing option for us. The consequence of this is that we are
running dangerous current account deficits and substantial budget
deficits in amounts that dwarf anything we have previously experienced.
Many observers think that these deficits--the fiscal deficit and the
current account deficit threaten our economy and our ability to deal
with the challenges of the future.
Mr. President, the most recent figures indicate that economic growth
has slowed to almost a crawl over the past 3 months. It was just over 1
percent in the last quarter of last year. That is the lowest rate of
growth since 2002, and but for the buildup of inventories that took
place in the fourth quarter, economic activity fell by three-tenths of
1 percent. So it was only the inventory accumulation that kept us from
experiencing negative economic growth.
Mr. Bernanke, along with his colleagues at the Fed and those on the
Open Market Committee, will face questions concerning the conduct of
monetary policy. Of course, monetary policy doesn't exist in a vacuum.
It plays a significant role in determining the shape and direction of
the economy. Therefore, we need to consider it in the broader context.
In fact, the Federal Reserve Act clearly mandates two goals: maximum
employment and

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stable prices. Those goals are set out in the Federal Reserve Act and
constitute the guidance and direction from the Congress to the Federal
Reserve for the objectives in the conduct of monetary policy.
The act says:

The Board of Governors of the Federal Reserve system and
the Federal Open Market Committee shall maintain long-run
growth of the monetary and credit aggregates commensurate
with the economy's long-run potential to increase production
so as to promote effectively goals of maximum employment,
stable prices, and moderate long-term interest rates.

Accomplishing the Fed's dual mandate is the most important
responsibility of the Chairman of the Federal Reserve. The experience
of the 1990s, with unemployment down at 4 percent and inflation below 3
percent, demonstrated that these goals can be harmonized, unlike the
assertion by some that they are inherently in conflict. Dr. Bernanke
was pressed on this point in his confirmation hearing because he has
been a proponent of what is called ``inflation targeting,'' which
requires the Fed to set a specific numeric target for inflation,
announce that target to the markets and then manage the economy with
the objective of reaching that target.
I want to underscore the importance of the Fed honoring its statutory
dual mandate and not replacing it with a policy of inflation targeting.
We must be concerned that if a numerical figure were to be set for
inflation to the detriment of other considerations, employment foremost
among them, policymaking would shift and so, too, would the debate
about the health and strength of the economy. I fear that the focus of
the debate would become not whether the Fed was successful in meeting
the dual mandate, but rather the Fed's one-sided success or failure in
reaching a numerical inflation goal.
Chairman Greenspan himself has made this point. Bloomberg News
recently reported:

Fed Chairman Alan Greenspan has rejected adopting a target,
saying it would rob U.S. policymakers of the flexibility they
need to respond to developments in a rapidly changing
economy.

I was, therefore, somewhat reassured when at his confirmation hearing
Dr. Bernanke told the Banking Committee that he ``subscribes entirely
to the Humphrey-Hawkins mandate,'' which puts employment growth and
output growth on a fully equal footing with inflation in terms of the
Federal Reserve's objectives. Furthermore he went on to say, ``I would
not be interested in pursuing that matter''--referring to inflation
targeting--``if I thought it involved changing the mandate of the
Federal Reserve.''
Mr. President, I put this issue out here only as a matter to be
focused on as we move ahead into the future. Dr. Bernanke indicated
that it was not his intention to seek changes in the Federal Reserve
Act. I think that is a wise and prudent course to follow. How much time
remains?
The PRESIDING OFFICER. The Senator has 14 minutes 20 seconds
remaining.
Mr. SARBANES. I yield myself an additional 3 minutes. We learned last
week that our economy slowed dramatically over the past 3 months to a
growth rate of 1.1 percent, the slowest growth level in the past 3
years and, obviously, insufficient to meet our needs. Moreover, as I
noted, even that modest growth was based entirely on inventory growth,
which is a one-time shot for the economy and not a sustainable basis
for growth.
The current unemployment rate of about 5 percent obscures the fact
that the job creation during the course of this administration is the
worst since the Hoover administration. In other words, every previous
administration since that of Herbert Hoover has produced more jobs than
this administration has produced. In fact, real wages are down for a
great number of Americans, and it is little wonder that working
Americans are concerned about their economic future.

Given these factors and the potential problems with our record level
of deficits and debt at home and abroad, I urge the Fed to consider
taking a pause from what has been a steady upward push in interest
rates. We have had 13 successive increases in interest rates. Short-
term rates have gone from 1 percent to 4.25 percent. We had 1-percent
growth in the economy last quarter.
Furthermore, let me note two or three other serious issues. One is
our current account deficit. Our international accounts are steeply
imbalanced. We expect the current account deficit to approach $800
billion for 2005, in excess of 6 percent of GDP. We are borrowing from
abroad over $2 billion on a daily basis to finance this deficit, and
there is a broad consensus among economic experts that current account
deficits of this magnitude are not sustainable. We will be obligated to
pay this debt out into the future, which means it will come right out
of the standard of living at home. Warren Buffet, talking about this
situation, warned that we risk becoming what he called a
``sharecropper's society.''
Furthermore, as we continue to fall deeper into debt with the rest of
the world, we are experiencing growing imbalances here at home. Real
wages for the majority of working Americans have declined, while the
real incomes of the wealthiest have increased astronomically. A recent
Bloomberg News story observed that U.S. wages are lagging inflation
and, even with unemployment near a 4-year low, workers have little
leverage to demand higher pay. Other articles have reported the record
bonuses that are now being given out on Wall Street. In fact, Chairman
Greenspan in testimony before the committee stated:

I think the income distribution issue is very critical
because you can't have a significant inequality of income and
expect to have support for the type of institutions which
have made this country great.

Mr. President, I also note the Fed's responsibility for carrying out
important supervisory and regulatory authority over the safety and
soundness of the Nation's banking and financial system. In the area of
consumer protection, the Fed has broad jurisdiction over a host of
consumer laws--the Community Reinvestment Act, Truth in Lending Act,
Truth in Savings Act, Home Mortgage Disclosure Act, Electronic Funds
Transfer Act, the Equal Credit Opportunity Act, and the Homeowners
Equity Protection Act. These are major responsibilities of the Fed over
and above its monetary policy responsibilities.
Finally, as I indicated, I intend to vote for this nominee. I think
this nominee is extremely well qualified. He will assume the
chairmanship at a time when the economy faces problems that have
serious implications for our future economic health and the prospect of
a rising standard of living for working Americans. In the current
climate, our Nation will be well served by a policy of prudence and
independent thought on the part of the Federal Reserve. I am hopeful
that Dr. Bernanke will draw upon his distinguished work as an academic
economist and his experience as a policymaker at the highest level of
the Federal Government to make a prudent and independent policy the
hallmark of the Fed in coming years.
Mr. DOMENICI. Mr. President, I rise today to express my support for
the nomination of Dr. Ben Bernanke to be Chairman of the Federal
Reserve. The Federal Reserve, or the Fed as it is commonly known, was
created by Congress over 90 years ago to create a safe and stable
financial system for the American people. The Chairman of the Federal
Reserve must be a person of sound and prudent judgment and strong
character. Throughout his academic and professional career, Dr.
Bernanke has exhibited all these traits and I laud President Bush for
nominating him to this important public position.
For the past 18 years, Americans have become accustomed to the sound
analysis and policy judgments of outgoing Chairman Alan Greenspan.
During this period, we as a nation have experienced several
transformational events. The stock market crashed in 1987, a mere 2
months into Chairman Greenspan's tenure, and we have also dealt with
financial crises in Asia, Latin American, and even closer, Mexico. The
country has also suffered major natural disasters and terrorist attacks
on our homeland. Throughout these occasions, Chairman Greenspan guided
our Nation's financial markets with astute analyses and sound policy
decisions. As a result, our economy has endured a number of shocks and
continues to remerge from each stronger than it was before.
In his hearings before the Senate, Dr. Bernanke displayed the candor
and intellectual gravitas that has endeared

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him to colleagues and policymakers throughout his long and
distinguished career. Dr. Bernanke was graduated from Harvard College
with a bachelor's degree and he later went on to earn a doctorate from
the Massachusetts Institute of Technology. Since then he has taught
economics to students at some of America's most prestigious
universities and has become a highly regarded scholar of banking and
monetary policy. Dr. Bernanke has a history of public service, having
served on his local school board in Montgomery Township, NJ, the U.S.
Census Advisory Board, and most recently the Council of Economic
Advisers.
Our economy faces a number of challenges in the near future. Some of
which include the pressures on the Social Security system, rising
health care costs, and stresses on the Federal budget. Dr. Bernanke
promises to bring a sound, fair, and nonpartisan economic adviser to
the President and Congress on a number of macroeconomic matters. I laud
his desire to continue pursuing policies aimed at maximum employment
and control over inflation.
Dr. Bernanke's qualifications for this job are impeccable, and I ask
my colleagues to join me in supporting his nomination to be the
fourteenth Chairman of the Federal Reserve.
Mr. CHAMBLISS. Mr. President, I rise today in support of the
nomination of a fellow Georgian, Dr. Ben Bernanke, to serve as not only
a member of the Board of Governors of the Federal Reserve System, but
to succeed Dr. Alan Greenspan as the next Chairman of the Board.
Dr. Greenspan has served America well for more than 18 years. During
his service as Chairman, he guided the U.S. economy through a number of
challenging hurdles including the stock market crash of 1987, the
financial crises in Mexico and Asia, recessions in the United States
and other spikes in the economy from corporate scandals, terrorist
attacks, and natural disasters. Dr. Greenspan's tenure also includes
the longest economic expansion in U.S. history which lasted from 1991-
2001. For these reasons, it is clear why many refer to Chairman
Greenspan as one of the greatest central bankers of all time.
While his footsteps will be difficult to follow, I am fully confident
that Dr. Bernanke will continue Chairman Greenspan's legacy by guiding
our economy in the right direction, and making the best decisions not
only for the American people, but for the role of the United States in
the global marketplace.
The Federal Reserve Board guides the Nation and its economy with a
safe, flexible, and stable monetary and financial system. As the U.S
economy continues to grow, so does the role of the Federal Reserve
Board in the global marketplace. Therefore, the qualifications for the
Chairman of the Federal Reserve System must be held to the highest
standard. I feel Dr. Bernanke's impeccable qualifications and financial
expertise make him an excellent candidate to succeed Dr. Greenspan.
Dr. Bernanke graduated from Harvard University with the highest
honors and later received his Ph.D. in Economics from the Massachusetts
Institute of Technology. Most recently he served as Chairman of the
President's Council of Economic Advisers, CEA, where he ``provided the
President with obiective economic analysis and advice on the
development and implementation of a wide range of domestic and
international economic policy issues.'' Prior to serving as Chairman of
the CEA, Dr. Bernanke served 4 years on the Board of Governors of the
Federal Reserve System.
Dr. Bernanke's expertise is well respected in the academic community.
He was a professor of Economics at Stanford University and later served
as a professor of Economics and Public Affairs at Princeton University,
where he also served as Chairman of their Economics department for 6
years. Dr. Bernanke also served as the Director of the Monetary
Economics Program of the National Bureau of Economics Research, as a
member of the National Bureau of Economic Research's Business Cycle
Dating Committee, and he has also worked for two terms as a member of
New Jersey's Montgomery Township Board of Education, and as the Editor
of the American Economic Review.
Dr. Bernanke is also one of the most cited authors in the financial
community. He has also given several important lectures at the London
School of Economics on monetary theory and monetary policy. Dr.
Bernanke has also been the recipient of many prestigious fellowships
and awards including the renowned Guggenheim Fellowship, the Sloan
Fellowship and the Econometric Society Fellowship.
I have no doubt that with such an impressive background, Dr. Bernanke
will serve with impartiality and will continue to guide our economy, as
Dr. Greenspan has done for the last 18 years, down a stable and
prosperous path. I urge my colleagues to join me in support of this
distinguished nominee, and confirm Dr. Bernanke to the Board of
Governors, and as Chairman of the Board for the next 4 years.
Mr. HATCH. Mr. President, I would like to take this chance to say a
few words of thanks to Alan Greenspan for his service to our Government
and to wish him well as he leaves the Federal Reserve. Alan Greenspan
has done a commendable job as Chair of the Fed, and we are, indeed,
fortunate to have had him in that position for the past 18 and a half
years.
The previous two decades have seen an amazingly large number of
crises that have impacted financial markets. The stock market crash of
1987, the Savings and Loan collapse and subsequent bailout in 1990, the
Mexican bond crisis of 1994, the Asian financial panic in 1997,
Russia's bond default and the subsequent collapse of Long Term Capital
Management in 1998, the collapse of the tech bubble in 2000, and the
implosion of Enron in 2001.
In recent years, we have witnessed a sharp rise in housing prices,
along with a concomitant chorus of financial experts exhorting him to
``do something.'' Besides these various financial crises, the United
States has also been the victim of a massive terrorist attack in 2001,
which shut down financial markets for over a week, and we were forced
to intervene militarily in Kuwait, Afghanistan, and Iraq.
Despite the staggering number of potentially catastrophic events, the
United States has had only two short recessions in the past 20 years, a
record that is to me simply amazing. Of course, it would be wrong to
give the Federal Reserve and Alan Greenspan full credit for the
prosperous conditions of the previous quarter century, but it is
impossible to conceive of us achieving this level of prosperity without
a vigilant and responsible Federal Reserve.
The main contribution of Chairman Greenspan and the Federal Reserve
in the past 18\1/2\ years has been the taming of inflation. The effort
to control this scourge began with Paul Volker, of course, but the
specter of inflation does not die easily. It took Alan Greenspan
another 10 or 15 years to finally rid the financial markets of the fear
that as the economy expands, so must the rate of inflation. The
evidence of high inflation's demise can be seen merely by looking at
mortgage rates. The record low interest rates of the past few years has
allowed tens of thousands of families in my home State of Utah to
afford to buy their own home, something that was beyond the reach of
many before.
Chairman Greenspan's success in taming inflation and creating a
stable economic climate has paved the way for our next Fed Chairman,
Ben Bernanke, to explicitly state that low inflation is his primary
goal. Indeed, countries all over the world are following our lead of
having an independent central bank dedicated to a stable price system,
modeled after the one in the United States. This is no small credit to
the ability of Mr. Greenspan and the capable economists employed by the
Federal Reserve.
The pressure on the Chair of the Federal Reserve to ``do something''
in response to crises, both real or perceived, can be great. It is to
his credit that Chairman Greenspan has been able to resist many of
those calls and avoided meddling in situations where the potential
economic benefits from such action were slight, but the potential costs
heavy. In central banking, inaction is most often the better part of
valor.
At this time, I would also like to express my enthusiastic support
for the nomination of Ben Bernanke to be the next Chairman of the
Federal Reserve's Board of Governors. Mr. Bernanke has

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served quite admirably for the past 4 years both as a member of the
Board of Governors and for the past 9 months as the head of the
President's Council of Economic Advisers. He is a world-renowned
scholar on monetary economics and the banking industry, and is one of
the preeminent experts on the causes and consequences of the Great
Depression.
Before Dr. Bernanke came to Washington, he was a professor of
economics at Princeton University, perhaps the top school for economics
in the world. He also served as its department chair for a number of
years. While living in Princeton, he served on the local school board
for a number of years, putting the lie to any notion that he has ever
been an ivory tower academic unfamiliar with how the real world
operates.
Benjamin Bernanke brings a gifted intellect, a wide variety of
relevant experience, and an understanding of the importance of what the
Federal Reserve does and the harm that it can bring to an economy. I
wholeheartedly encourage my colleagues to join with me in voting for
his nomination.
Mr. MENENDEZ. I rise in support of the nomination of Ben Bernanke, of
my home State of New Jersey, to be the next Chairman of the Federal
Reserve. Once again, New Jersey is honored that the President has
nominated one of our own to serve our Nation in such a vital position.
Dr. Bernanke has a remarkable record of scholarship. He graduated
from Harvard with top honors and later earned a doctorate in economics
from the Massachusetts Institute of Technology, MIT. Dr. Bernanke then
entered academia and has taught at some of the preeminent universities
of our Nation, starting at Stanford before continuing at MIT and New
York University and eventually ending as the Chairman of the Economics
Department at Princeton University. He has also served our Nation with
distinction in his roles at both the Council of Economic Advisers and
the Federal Reserve.
As the newest member of the Senate Committee on Banking, Housing, and
Urban Affairs, I look forward to working with Dr. Bernanke in ensuring
that inflation remains in check, that our Nation's deficits are
addressed and dealt with in a forthright manner, and that all Americans
are able to successfully participate in our country's economy. He has a
reputation of basing his decisions on sound economics, rather than
ideology and partisanship, and I expect this to continue in his new
role as Chairman.
Mr. President, I would be remiss if I did not also take this time to
thank Alan Greenspan for his almost two decades of service and economic
stewardship as the outgoing Chairman.
I am quite pleased that the President has nominated my fellow New
Jerseyan, Dr. Bernanke, to be Chairman of the Federal Reserve and am
confident that he will do a good job in his new position, while making
our shared State of New Jersey proud.
Mr. President, I yield the floor.
Mr. SHELBY. Mr. President, how much time do I have?
The PRESIDING OFFICER. The Senator has 18 minutes 43 seconds
remaining. The Senator from Maryland has 8 minutes 5 seconds remaining.
Mr. SHELBY. Does the Senator wish to continue?
Mr. SARBANES. I will yield half of the remaining time to Senator
Dorgan and the other half to Senator Schumer.
The PRESIDING OFFICER. The Senator from New York is recognized for 4
minutes 17 seconds.
Mr. SCHUMER. Thank you, Mr. President. I rise in strong support of
the nomination of Mr. Bernanke to become Chairman of the Federal
Reserve. First, I would be remiss if I didn't say a few words of
congratulations to Alan Greenspan, who has truly been a giant in the
field. He will be missed. He hovered over our economy similar to a
caring guardian and has done an incredibly fine job. Every American of
every political stripe should be grateful that Alan Greenspan served so
well and so long. I called him yesterday to wish him well. He will do
just fine. He is 79 and he is entitled to retire. I, for one, with no
aspersions on Mr. Bernanke, wish he would have even stayed a little
longer.
I think Mr. Bernanke is extremely well qualified for the job for a
number of reasons. That is why I strongly support his nomination. He is
erudite, he is smart, and he is one of those rare people who has made
monetary policy his life's work. Many of us would not choose to do
that, but he did and he has done it very well.
Second, Mr. Bernanke has assured us that he will follow the policies
of Chairman Greenspan. That bespeaks well of his wisdom because
Chairman Greenspan did such a superb job managing monetary policy.
Anybody who says that starts with a leg up.
Third, he is not an ideologue. He is a solid, thoughtful person. He
does not go to the extreme. He does not have a narrow theory that
governs the way economic policy should be made. He assured us, despite
some rumors to the contrary, for instance, that he would not follow a
mechanistic, formulaic monetary policy. That is very important because
our economy is so complicated and there are so many international
considerations that you cannot be mechanistic in this changing new
world, and he is not.

He is also not an ideologue in terms of general economic policy. He
is not one of these people who advocate tax cuts above all, even if it
plunges us into greater deficits. He is a thoughtful, moderate man. He
is the right choice for the job.
Senator Graham and I have been very concerned about the balance of
trade with China and them pegging their currency at a low rate. He
showed sympathy--in fact, greater sympathy than many--when we talked
about that with him.
There are great challenges for Chairman Bernanke. There is the
internationalization of the economy. That affects monetary policy
because, as I said, there are loopbacks. What happens with the yen and
the yuan and the Euro affects the dollar in ways that did not occur
before when so little of our economy was based on international trade.
He has to deal with another problem in our society--the agglomeration
of wealth to the top. Our society cannot continue with the top 10
percent that glomerates most of the wealth. I hope he will speak out on
issues beyond monetary policy because we don't have any respected
voices who do that without a partisan edge, other than the Chairman of
the Fed.
I make one final point. Contrast the nomination of Dr. Bernanke and
Judge Alito. Dr. Bernanke is a moderate. There was consultation, and he
is getting every Democratic vote. Judge Alito was a partisan
nomination. There was no consultation. He is regarded by many of us on
key issues at the extreme, and we had a divided vote. I hope and pray
that in the future, the President will follow the nomination process
more like he did with Dr. Bernanke, a unifying choice, rather than like
Judge Alito, a partisan choice.
I yield the floor.
The PRESIDING OFFICER. The Senator from North Dakota is recognized.
Mr. DORGAN. Mr. President, I will be brief. I had thought I agreed to
the unanimous consent request in exchange for 10 minutes to speak on
this nomination, but if that time does not exist, I will truncate my
remarks.
Mr. SHELBY. Mr. President, I will be glad to yield to the Senator
from North Dakota some of my time.
Mr. DORGAN. Mr. President, in that case, let me compliment the
chairman and ranking member, which I would have done in any event. Let
me spend more time complimenting them for their work.
The Banking Committee is very important in the Senate. It takes a
very serious view of these issues and I know did a very thorough job in
the hearings held late last year on this nomination for Chairman of the
Federal Reserve Board. I thank the chairman for his courtesy, and I
thank the chairman and the ranking member for their work, not just on
this nomination but on so many important issues.
I don't come to the Chamber to oppose Mr. Bernanke's nomination. That
is not my purpose. I wish him well. I want him to succeed. He is going
to be confirmed almost unanimously today by the Senate.
Chairman Greenspan and I have had very significant differences over a
long period of time. But I wish him well. I want to thank him for his
service to our country, even if we have different views about monetary
policy.

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I know people will talk about big shoes to fill. Whenever someone
leaves, there are big shoes to fill. I don't know if the shoes are big,
little, Ferragamos or Payless--but they are shoes. We have someone else
answering to the call of public service, in this case someone well
qualified.
Mr. Bernanke has served at the Federal Reserve Board dealing with
monetary policy and at the White House dealing with fiscal policy for
President Bush. The Senate will confirm him today, and he will go back
to the Federal Reserve Board as Chairman.
What I wanted to say today is that we have the twin issues of fiscal
policy and monetary policy, and there needs to be some responsibility
to understand how they work together to improve this country's future.
I am very concerned about this country's economic future for reasons
that Senator Sarbanes touched on a moment ago. I wish to describe it to
my colleagues.
I think the Federal Reserve Board for some long while--and, yes, it
was under Chairman Greenspan's stewardship--has been providing green
lights saying, It is OK, go right ahead, to a series of fiscal policy
moves which has put us deep in debt. It is not just in budget policy
where we have these deep and abiding long-term deficits and, therefore,
increases in the Federal debt. We also have large trade deficits. In
about a week and a half, we will have an announcement about last year's
trade deficit. My expectation is it is going to be about $750 billion,
the highest in history. That debt is devastating to this country. It is
unsustainable. At the same time, in fiscal policy, the Federal debt
will increase in this fiscal year somewhere around $650 billion.
I wish to put up a chart that shows what is happening. This is the
wall of debt in fiscal policy. You will see year after year after year,
going from 2006 to 2011, up to $12 trillion in fiscal policy debt.
Extend this another 5 years, and you get to $16 trillion. This is a
relentless wave of bad news in fiscal policy that we cannot continue.
This is just fiscal policy. The trade policy debt looks even worse. Its
growth is even more dramatic. Of course, that relates to the issues of
jobs.
Last week, we heard Ford Motor say: Oh, by the way, we are going to
cut 30,000 workers. Several months ago, it was General Motors saying:
By the way, we are going to cut 20,000 to 30,000 workers. Four months
before that, it was General Motors calling in the heads of the
companies that provide the General Motors' parts, 300 people in a room,
and the person in charge of parts for General Motors said this to them:
You need, when making parts for General Motors cars, to outsource those
jobs to China to get the costs down.

Where is all this heading? Ford, General Motors, parts to China, $750
billion trade deficit in a year? It is headed in the wrong direction,
and we are today selecting one person who is going to be in a position
of very significant influence in our Government about the direction of
this country. Mr. Bernanke will play a significant role in determining
the amount of economic growth and opportunity that will exist in the
future, what kind of good jobs we will have, and how many.
Our fiscal policy, judged by anyone soberly looking at the facts, is
seriously off track. I don't blame Mr. Bernanke for that, although he
most recently worked at the White House in the fiscal policy arena. It
is not a question of blame, it is a proposition that all of us,
Republicans and Democrats, liberals, conservatives, moderates, must
finally come together to say this is unsustainable.
Our country is off track in fiscal policy and trade policy. This debt
will have consequences. And in the construct of monetary policy, it is
critically important that Mr. Bernanke understand these messages and
not do as has been done in most recent years and put up a big old green
light and say to friends in Congress: Oh, by the way, go ahead, it will
all work out; be happy. Fine. That is exactly what has happened in
recent years, with a couple of exceptions.
The Federal Reserve Board is a strong central bank that is largely
accountable to no one. I know, go back to the nineteen-teens when the
Federal Reserve Board was created, and it was said on the floor of the
Senate, we are not creating a central bank, we are not creating a
strong central bank, and we are not for certain creating a strong
central bank accountable to no one, but that's exactly what happened.
You can make the case over a long period of time that things have gone
pretty well with monetary policy here, fiscal policy there.
My colleague from Maryland talks about economic stabilizers. You can
talk about some successes. Our recessions have been less deep in recent
years because of economic stabilizers and some thoughtful approaches to
dealing with monetary policy and fiscal policy. But I believe it is
very important for us to understand where we are. If you don't
understand where you are at the moment, it is pretty hard to figure out
where you are going.
As we consider the nomination of one of the most important people in
this country with respect to economic policy, a new Chairman of the
Federal Reserve Board, I call attention once again to the fact that we
have very serious, abiding, long-term economic problems which, unless
resolved, will injure this country's long-term opportunity to remain a
world economic power. It is that serious.
One final point. There is a little fund down at the Federal Reserve
Board to which I also wish to call attention. I assume Mr. Bernanke
knows of it. It is a fund in which $12.9 billion exists. It is a fund
at the Federal Reserve Board which is called a surplus account. The
Federal Reserve Board, I remind everyone, effectively creates money. It
does not need a rainy-day fund because it will never lose money. It has
not suffered an annual loss in some 90 years. And yet the Federal
Reserve Board has a rainy-day fund, a surplus fund, which has grown now
to $12.9 billion.
I believe the Fed and the Congress ought to take a hard look at that
and ask themselves, given the fact we are choking on debt these days,
is there any reason that the Federal Reserve should continue to have a
surplus fund of $12.9 billion? The Fed wants a fund apparently because
it might lose money someday. The Fed makes money. The Fed creates
money. The Fed does not need $12.9 billion in a surplus account.
So as Mr. Bernanke receives his approval of the Senate today, my hope
is he might, with Members of Congress, take a look at that issue.
Senator Reid and I and others asked for a GAO report on that 10 years
ago now--and the Fed blithely ignores the consequences of any of that
and does what it wants to do. In fact, at that point, the reserve or
surplus rainy-day fund was $4.5 billion. Not only did the criticism of
that fund not deter them, it has grown now to nearly triple that
amount, in a rainy-day fund in a climate where it never rains. I am
sorry, but Mr. Bernanke should take a good, hard look at that, and so
should the Congress.
Having said all that, pointing out especially that we have very
abiding and serious fiscal policy problems and trade policy problems,
my hope is that Mr. Bernanke, in seizing the reins of our monetary
policy in this country as Chairman of the Federal Reserve Board, has a
successful tenure. I wish him well. I want him to do well. I want our
country to do well. I come to the Chamber only to ask that all of us
finally join together, including the Chairman of the Federal Reserve
Board, to see where we are and where we must be if we want a strong
America in the future, one that grows and finds opportunities for our
children and grandchildren.
I again thank my two colleagues for the time. I yield the floor.
Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. SHELBY. Mr. President, I ask unanimous consent the order for the
quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. SHELBY. Mr. President, I reserve the remainder of my time at this
point.
The PRESIDING OFFICER. The Senator from Alabama reserves the
remainder of his time, 11 minutes 17 seconds.
The Senator from Georgia is recognized.
(The remarks of Mr. Isakson and Mr. Obama are printed in today's
Record under ``Morning Business.'')

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Mr. OBAMA. Mr. President, today I am introducing a resolution
honoring the life and contributions of Coretta Scott King. I hope all
my colleagues will join me in this effort.
Mr. SARBANES. Will the Senator yield? Will the Senator place me on
his resolution?
Mr. OBAMA. I am happy to.

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