[Congressional Record (Bound Edition), Volume 156 (2010), Part 1]
[Senate]
[Pages 836-859]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           EXECUTIVE SESSION

                                 ______
                                 

NOMINATION OF BEN S. BERNANKE TO BE CHAIRMAN OF THE BOARD OF GOVERNORS 
                     OF THE FEDERAL RESERVE SYSTEM

  The PRESIDING OFFICER. Under the previous order, the Senate will 
proceed to executive session to consider the following nomination, 
which the clerk will report:
  The assistant 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.
  Mr. REID. Madam President, we want to make sure that all Senators 
understand, we will be debating through the respective meetings the two 
caucuses are having. It is important we get this done in the time 
allotted, so people will not be able to wait until after 3:20 to do 
their speeches.
  On the Democratic side, I yield 3 minutes to the Senator from South 
Dakota, Tim Johnson.
  The PRESIDING OFFICER. The Senator from South Dakota.
  Mr. JOHNSON. Madam President, I rise in support of the reconfirmation 
of Chairman Ben Bernanke to serve another term as Chairman of the 
Federal Reserve Board of Governors. As the administration and Congress 
continue to look for ways to restore our Nation's financial stability, 
promote economic recovery, and work on legislation to ensure that 
another economic crisis like the one we faced last year never happens 
again, we need Chairman Bernanke's steady leadership.
  While there has certainly been criticism of the Federal Reserve for 
not doing enough to protect consumers and for the unprecedented actions 
it took during the financial crisis, there is also consensus that Mr. 
Bernanke kept our Nation out of a depression and has kept inflation in 
check.
  As our Nation recovers and faces additional challenges in the months 
ahead, there is no doubt that having one of the world's foremost 
experts on the Great Depression at the helm of the Fed is a benefit to 
our Nation.
  But it cannot be business as usual for the Fed. Like the many banks 
on Wall Street, the Fed must be more transparent and more accountable 
for its actions. The Federal Reserve cannot just be the organization 
that picks up after a financial institution fails while placing our 
entire economy at risk in doing so. The status quo at the Fed is not 
acceptable, and our Nation needs a central bank that is proactive in 
addressing concerns within financial institutions and the economy.
  I believe Mr. Bernanke is committed to these goals, and I support Mr. 
Bernanke's confirmation.
  Madam President, I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  The Senator from Alabama.
  Mr. SHELBY. Madam President, I rise today to oppose--to oppose--the 
reappointment of Ben Bernanke for a second term as Chairman of the 
Board of Governors of the Federal Reserve System.
  The principal reason for my opposition to this nomination is that I 
believe in accountability. In particular, I believe it is the duty of 
this body; that is, the Senate, to hold accountable those regulators 
whose poor oversight of our financial institutions and markets helped 
produce the greatest economic crisis this country has experienced in 
some 80 years.
  Because the Federal Reserve, during Chairman Bernanke's tenure, 
failed to take the steps to ensure that our financial institutions were 
properly regulated and would not need Federal bailouts to survive, I do 
not believe Mr. Bernanke should be confirmed for another term.
  Prior to the recent financial crisis, as a member of the Board of 
Governors, Dr. Bernanke advocated monetary policies that contributed to 
excessive risk taking. Subsequently, as Board Chairman, he ignored or 
downplayed serious emerging risks. He failed to use regulatory 
authority available to the Fed to prevent housing speculation and 
unsound lending practices, often misjudged the nature of problems in 
markets, contributed to market turbulence

[[Page 837]]

by appearing to act inconsistently and in an ad hoc manner. He failed 
to ensure transparency of actions and basically took actions damaging 
to the political independence of the Federal Reserve and of our 
Nation's monetary policy.
  I do not believe Chairman Bernanke has executed sound judgment and 
oversight over the Fed's monetary policy, lender of last resort, and 
regulatory and supervisory functions. I will explain.
  Chairman Bernanke advocated a policy of remarkably low interest rates 
for an extended period of time following the 2001 recession, providing 
an environment that helped fuel a speculative bubble in real estate 
lending. Subsequently, in the face of rising home prices and risky 
mortgage underwriting practices, the Fed failed to act under Bernanke's 
watch by choosing not to use its rulemaking authority over mortgages to 
arrest the risky practices and address growing risks. Yet, amazingly, 
given a history of failure in supervision and regulation, Chairman 
Bernanke now continues to actively campaign for maintaining and further 
expanding the regulatory powers of the Federal Reserve.
  The financial panic our markets experienced in 2008 was the most 
severe, as I said, in modern memory. Its repercussions have resulted in 
our unemployment rate surging to more than 10 percent and the worst 
economic growth in a generation. Our present economic problems, 
however, are no accident. In large measure, they stem directly from the 
actions of our financial regulators.
  It is the responsibility of our financial regulators to ensure that 
our financial institutions are properly supervised and that they 
promote, rather than threaten, our national economy. Unfortunately, the 
recent financial crisis demonstrated that our financial regulators did 
not do their jobs. Our banks were undercapitalized, mortgage lending 
standards were far too loose, and expectations of government bailouts 
were too prevalent.
  Dr. Bernanke's Federal Reserve played a key role in setting the stage 
for the financial crisis we are in now.
  First, under his leadership, the Federal Reserve failed to ensure 
that our financial institutions were adequately capitalized, as I 
mentioned a minute ago. Indeed, the Federal Reserve, our Federal 
Reserve, led the effort to reduce capital in our largest financial 
institutions through the adoption of the Basel II capital accords. The 
Fed even considered abandoning the leverage ratio, which ensures that 
all banks maintain at least 4 percent of capital.
  Think about it a minute. As a result, when the crisis struck, many of 
our financial institutions did not have the capital necessary to 
withstand the downturn. Not surprisingly, the Federal Reserve then 
argued that a taxpayer bailout of the banks was the only way to prevent 
an economic collapse. But rather than do its job and ensure that our 
financial institutions were adequately capitalized, the Fed waited 
until the crisis was at hand and then rescued its banks with taxpayer 
funds.
  Think about it a minute. Ben Bernanke's Federal Reserve also failed 
to detect and address the decline in lending standards and growing use 
of subprime loans. At the core of our financial crisis is the fact that 
far too many home loans were made that borrowers will be unable to pay, 
probably ever.
  The failure of Bear Stearns, Lehman, Washington Mutual, and AIG 
largely stems from the sharp declines in mortgage values. Although 
Congress gave the Federal Reserve authority to address lending 
standards and subprime loans when it passed the Home Ownership and 
Equity Protection Act in 1994, the Fed failed to enact strong 
regulations until 2008--more than 2 years into Chairman Bernanke's 
term.
  In addition, Ben Bernanke's Federal Reserve has failed to adequately 
supervise many of our largest financial institutions, most notably 
Citigroup. For years, it has been no secret that the problems of 
Citigroup have been well known everywhere, but the Federal Reserve 
always sought to look the other way rather than deal with its 
complicated problems.
  By failing to address Citigroup during the good times, the Federal 
Reserve left our largest financial institution at that time highly 
vulnerable to the next downturn. In the end, the Federal Government had 
to inject $40 billion and guarantee more than $300 billion of 
Citigroup's assets. The Fed's failure as a supervisor--the regulator--
placed U.S. taxpayers and our economy directly at risk.
  Regardless of how Chairman Bernanke performed during the financial 
crisis, the record of the Fed leading up to the crisis should not be 
ignored by the Congress. A close examination of Chairman Bernanke's 
performance during the financial crisis reveals that he was too slow to 
recognize how serious the situation was, and when he did react, he 
acted in an ad hoc fashion that greatly exacerbated the crisis.
  After the housing market bubble began to burst in 2006, Chairman 
Bernanke was slow to entertain possible spillovers from housing into 
the general economy and the financial system itself. Even after Bear 
Stearns failed, Chairman Bernanke did little to prepare for additional 
failures. In other words, Bernanke fiddled while our markets burned.
  In the 6 months between the failures of Bear Stearns and Lehman, the 
Federal Reserve did very little to prevent either another taxpayer 
bailout or a sudden and disorderly collapse of Lehman, even though the 
problems were well known to the Fed and to everybody else. As a result, 
when Lehman was ultimately allowed to fail, our markets responded 
sharply because they could not understand why the Fed let Lehman fail 
but rescued Bear Stearns.
  Markets need clarity about policy, especially in times of crisis. Yet 
just when our markets needed clarity about Fed policy, Chairman 
Bernanke's ad hoc responses left our markets in the dark. Consequently, 
the failure of Lehman was far more disruptive and damaging than it 
needed to be.
  Bernanke's response to the financial crisis also raises questions 
about his judgment. In October 2008, he appeared before the Banking 
Committee in the Senate to urge the passage of TARP. He testified that 
the government purchase of toxic assets from banks was the best way to 
respond to the financial crisis.
  At the time, as a lot of you know, I opposed TARP because I did not 
believe purchasing toxic assets was a workable solution or we should 
bail out anybody. I argued that it risked making our financial problems 
worse by indirectly causing the failure of other financial 
institutions, and it did.
  Despite Chairman Bernanke's urging that an asset purchase was the 
best solution, just days after the passage of TARP, the Treasury 
Department and the Federal Reserve abandoned the very asset purchase 
plan that he judged to be the best course forward when he testified 
before Congress. Equity injections were employed because the asset 
purchase plan was proven to be unworkable, he said.
  The full story of AIG is yet to be told. Unfortunately, the Fed and 
other regulators have gone out of their way to hide what really has 
gone on at AIG both before and after the bailout from Congress. What is 
clear, however, is that the Fed knew more about AIG's problems than it 
has admitted so far.
  The Fed has repeatedly stated that it did not learn of AIG's problems 
until the weekend of September 12, 2008, and that it was stunned to 
learn of its problems. Really? Yet in his recent book, ``Too Big to 
Fail,'' Andrew Ross Sorkin reports that the CEO of AIG met with then-
New York Fed President Tim Geithner about AIG's problems on at least 
two occasions prior to September 12, 2008.
  On one occasion, AIG's CEO gave Mr. Geithner, at that time, documents 
detailing AIG's financial condition and its exposures to other 
financial institutions. We still do not know what Treasury Secretary 
Geithner, at that time, did upon learning about the problems at AIG, or 
whether Chairman Bernanke knew of AIG's meeting with the New York Fed 
at that time, Mr. Geithner.

[[Page 838]]

  The fact that the Fed may have known about the problems at AIG before 
its collapse raises serious questions about whether they ignored early 
warnings and failed to take action before the situation became 
untenable without massive taxpayer bailouts.
  Many have said that if Chairman Bernanke is not reappointed, 
financial markets will be rattled. The notion seems to be that 
continuity of leadership will be valued more by markets than the 
assurance of responsible and accountable leadership at the Fed. I 
believe this perspective is short-sighted and wrong. I believe it is 
more important to find the most competent person available for the job 
than to simply adhere to the status quo.
  It is also wrong to speculate as to what might happen should someone 
other than Mr. Bernanke serve as Chairman. I believe it is far more 
important to consider the facts surrounding Chairman Bernanke's record 
than it is to speculate about the impact of his departure. The record 
clearly indicates that considerable economic devastation occurred as a 
result of Chairman Bernanke's loose monetary policy and weak regulatory 
oversight. Millions of people are now out of work in this country and 
trillions of dollars in savings have been lost.
  Those who try to frighten others with notions of what might happen 
are ignoring the hard reality of what already has happened. If we don't 
hold Chairman Bernanke accountable, what precedent are we setting for 
future regulators? What incentive will they have to take the tough 
steps necessary to ensure that our financial institutions are 
adequately regulated? I fear that the prospects of a high-paying job on 
Wall Street will diminish a lot of the incentives to be a good 
regulator unless they know Congress will hold them accountable if they 
fail to do their job. How can we ever expect our regulators to perform 
if, after the greatest financial crisis in living memory, not a single 
culpable regulator is held accountable?
  Unfortunately, this is a theme that is repeated too often in 
Washington. Something terrible happens, and although Congress exposes 
both institutional and individual failures, nobody is held accountable, 
and the only thing that ever seems to happen is the failed 
institutions, along with their failed leaders, get more authority and 
more money. This needs to end.
  The American people rightly believe that any one of us who neglects 
to do our job should be held to account, not rewarded. I intend to do 
my job and vote no on a second term for Ben Bernanke.
  The PRESIDING OFFICER (Mr. Burris). The Senator from Connecticut.
  Mr. DODD. Mr. President, I yield 5 minutes to my colleague from New 
Jersey.
  The PRESIDING OFFICER. The Senator from New Jersey is recognized.
  Mr. MENENDEZ. Thank you, Mr. President. Let me thank my distinguished 
chairman of the Banking Committee for yielding time.
  I rise in support of a man whose position I do not envy. Chairman 
Bernanke has faced some extraordinary economic circumstances and he has 
kept a steady hand on the tiller in a perfect economic storm that has 
threatened this Nation's underlying financial stability. Faced with an 
economy that was headed in a downward spiral, Chairman Bernanke and the 
Fed had what appeared to be a set of Hobson's choices: Make tough 
decisions or preside over a global economic meltdown. I think most of 
us agree that doing nothing was not an option.
  Having said that, I do believe there was more the Fed could have done 
to mitigate the housing bubble, supervise the banks, enact muscular 
consumer protections, and provide credit to small businesses. I 
believe--and Chairman Bernanke admitted himself--he could have done 
more to mitigate risk and require higher capital standards.
  In the future, I expect the Fed will be more responsive to the needs 
of Main Street, where there is small business innovating, selling 
something or creating the new jobs of the 21st century, and to the 
needs of American families across this country. I expect it will be 
more vigilant to prevent a repeat of the economic crisis we have 
experienced and will get ahead of future challenges we will face, such 
as commercial loans and credit card defaults.
  But despite these reservations, I will be voting in favor of 
confirmation because it is my belief that history will show the 
recession would have spiraled into a depression had Chairman Bernanke 
been timid or equivocal in his actions. I am voting yes because, in my 
view, Chairman Bernanke has proven his leadership and his value to this 
Nation during this unprecedented crisis. To vote against confirmation 
would unnerve investors and exacerbate economic uncertainty in an 
economy that needs confidence and stability, not volatility.
  I believe Chairman Bernanke is an astute scholar of the Great 
Depression and is now arguably the first and foremost expert on the 
great recession. At this moment in history, someone who has learned 
from two of the most devastating economic disasters in American history 
is certainly qualified to lead the Fed.
  I will vote yes because, in my view, what we should not do is change 
leadership at the Fed at a time when what we need most is a steady, 
experienced hand at what appears to be the very beginning of an 
economic recovery. I will vote yes because, recently, Chairman Bernanke 
has committed to more muscular regulatory reform that will corral the 
bulls on Wall Street. He has had the will to take politically unpopular 
strategic action, which history will show was necessary under the 
economic circumstances created by the last 8 years of runaway, laissez-
faire financial regulatory policies. He understood the importance of 
keeping inflation low, forcing down interest rates, and stabilizing the 
financial system. At this time, his work is not yet done, and I believe 
we need the wisdom of patience. As Elizabeth Barrett Browning said: 
``Measure not the work until the day's out and the labor done.''
  I will vote yes because Chairman Bernanke has vowed, in a letter to 
acting Comptroller General Gene Dodaro, to provide all records 
necessary for a GAO audit of the Fed to give a clear understanding of 
his and the Fed's actions in the $182.3 billion bailout of AIG. I will 
vote yes because I believe he understands the danger of exacerbating 
the crisis by tightening monetary policy at the wrong time.
  President Kennedy said: ``In knowledge's light we must think and not 
act only for the moment but for our time.''
  He told the story of a man who asked his gardener to plant a tree, 
but the gardener objected saying the tree was a very slow-growing tree 
and that it would not reach maturity for 100 years, to which the man 
replied: In that case, there is no time to lose. Plant it this 
afternoon.
  Let us not step back and succumb to the urge to act for the moment 
but do what is right for our time. Solving our economic crisis surely 
will not take 100 years, but the seeds of recovery that are taking 
place right now need to be nurtured by an experienced hand.
  I urge my colleagues to join me in voting to ensure confidence and 
stability at the Fed, not volatility; the type of confidence and 
stability that is necessary for our time.
  I yield back the remainder of my time to the chairman.
  The PRESIDING OFFICER. The Senator from Kentucky is recognized.
  Mr. BUNNING. Mr. President, I yield myself such time as I may 
consume. I have up to 30 minutes, but I don't think I will use that.
  Four years ago, when Chairman Bernanke was first nominated to be 
Chairman of the Federal Reserve, I was the only Senator to vote against 
him. In fact, I was the only Senator to raise serious concerns about 
his nomination. I opposed him because I knew he would continue the 
legacy of Alan Greenspan, and I was right. But I did not know how right 
I would be, and I could not imagine how wrong he would be in the 
following 4 years. From monetary policy to regulation, consumer 
protection, transparency, and independence, Chairman Bernanke's time as 
Fed Chairman has been a failure. We must put an end to his and the 
Fed's failure, and there is no better time than now.

[[Page 839]]

  The Greenspan legacy on monetary policy was breaking from the Taylor 
rule to provide easy money and, thus, inflate bubbles. Not only did 
Chairman Bernanke continue that policy when he took control of the Fed, 
but he supported every Greenspan rate decision when he was a Fed 
Governor before he became Chairman. Sometimes he even wanted to go 
further and provide more easy money than Chairman Greenspan. Yet, even 
to this day, Chairman Bernanke continues to deny that Fed actions 
played any role in inflating the housing bubble, despite overwhelming 
evidence and the consensus of economists to the contrary. In his 
efforts to keep filling the punchbowl--which is a term used by Chairman 
Bernanke himself--he cranked up the printing presses to buy mortgage 
securities, Treasury securities, commercial paper, and other assets 
from Wall Street. Those purchases, by the way, led to some nice profits 
for the Wall Street banks and dealers who sold them to the Fed.
  On consumer protection, Chairman Bernanke went along with the 
Greenspan policy before he was Chairman and continued it after he was 
promoted. The most glaring example is it took him 2 years to finally 
regulate subprime mortgages, after the Fed had already done nothing for 
the prior 12 years. Even then, he only acted after pressure from 
Congress and after it was clear subprime mortgages were at the heart of 
the economic meltdown. On other consumer protection issues such as 
credit cards, he only acted as the time approached for his confirmation 
to another term at the Fed.
  As the economy started to slide and the housing bubble peaked and 
then burst, Chairman Bernanke failed to notice the problems or do 
anything about them until it was too late. During that time, he made 
many statements showing how much he did not understand what was going 
on in the economy or how severe the crash would be. I wish to read a 
few of those statements so everyone understands how wrong he has been.
  In March of 2007, this is what Chairman Bernanke said:

       The impact on the broader economy and financial markets of 
     the problems in the subprime markets seems likely to be 
     contained.

  Then, in May of that year, he said:

       We do not expect significant spillovers from the subprime 
     market to the rest of the economy or to the financial system.

  The following February he said:

       Among the largest banks, the capital ratios remain good and 
     I don't expect any serious problems of that sort among the 
     large, internationally active banks that make up a very 
     substantial part of our banking system.

  A few months later, in June of 2008, he said:

       The risk that the economy has entered a substantial 
     downturn appears to have diminished over the past month or 
     so.

  Then, in July of 2008, he said Fannie Mae and Freddie Mac are 
``adequately capitalized'' and ``in no danger of failing.''
  Finally, in May of last year, speaking about the unemployment rate, 
he said:

       Currently, we don't think it will get to 10 percent.

  Well, we all wish he had been right on that one.
  I could read a few more quotes, but I think those are enough to show 
how wrong he has been on major economic issues. Of course, everyone 
makes mistakes, so I asked Chairman Bernanke about these errors in 
written questions I gave him after his confirmation hearing. His 
answers did not make me feel any better. He said the Fed did not 
understand the relationships between financial firms, how the problems 
in the financial sector would move to the real economy or how severe 
the financial crisis would be. That is in his written response to me. I 
thought those were the kinds of things regulators and the Fed, in 
particular, were paid to understand and address. We shouldn't be paying 
Fed Chairmen to learn on the job.
  Just like with consumer protection, Chairman Bernanke did not take 
the job of regulating the banks under the Fed's authority seriously. 
Instead of close supervision of the biggest and most dangerous banks, 
he allowed them to grow their balance sheets and increase risk. The 
same is true on derivatives. After taking over the Fed, he did not see 
any need for serious regulation of derivatives until it was clear we 
were headed to a financial meltdown thanks, in part, to those products.
  Even worse than the failures and flawed policies I just mentioned, 
Chairman Bernanke destroyed the independence of the Fed. He bowed to 
the political pressures of the Bush and Obama administrations and 
turned the Fed into an arm of the Treasury. Walking arm-in-arm with the 
Treasury, Chairman Bernanke bailed out all the large financial 
institutions, including many foreign banks. And he put the printing 
presses into overdrive to fund the government's spending and hand out 
cheap money to Wall Street. Instead of taking that money and lending to 
consumers and cleaning up their balance sheets, the banks started to 
pocket record profits and pay out billions of dollars in bonuses.
  And now it appears that Chairman Bernanke is compromising the 
independence of the Fed to get votes for his confirmation in the 
Senate. After a meeting with Chairman Bernanke, the majority leader 
issued a statement saying that he had expressed concerns to Chairman 
Bernanke about things that the Fed was not doing and that Chairman 
Bernanke committed to take action. The majority leader also went on to 
state that his support for Chairman Bernanke was ``not unconditional''. 
I do not question the majority leader's intent or actions here, and I 
certainly do not have a problem with a Senator telling the Fed Chairman 
about his concerns or urging him to take actions. I have done so myself 
on many occasions. And it is not a problem for the Fed Chairman to 
agree that he and the Fed need to address concerns raised by a Senator. 
But what is not appropriate is the Fed Chairman making commitments in 
order to secure votes for himself. I hope that is not what happened in 
this case.
  Now with great power goes the responsibility to use that power in an 
open and transparent way. We have all heard Chairman Bernanke talk a 
lot about transparency, but his actions speak a lot louder than his 
words. He promised Congress more transparency when he first became 
Chairman, and he promised us more transparency when he came begging for 
TARP. While he has published some more information than before, those 
efforts fall short and he sill refuses to provide details on all of the 
Fed's actions over the last 2 years.
  After his confirmation hearing, I asked Chairman Bernanke for a list 
of documents for us to review, all of which are reasonable for Congress 
to see. For example, the list included documents about the bailouts of 
Bear Stearns and AIG, information about the Fed's regulation of banks 
before and during the crisis, and transcripts of monetary policy 
meetings that have not yet been made public. But his answer made it 
clear that he is not going to open up the Fed's actions to review by 
Congress or the taxpayers. Instead of providing those documents, what I 
got in return was a folder full of paper they printed off the Fed's web 
page. That kind of response is not only disrespectful to the Senate, 
but it raises the question of what they are hiding.
  Following the markup of Chairman Bernanke's nomination, Chairman Dodd 
did arrange for Banking Committee members and staff to review some of 
the documents surrounding the AIG bailout. I thank him for doing that, 
and I took him up on the offer and went down to the Fed myself to look 
at them. In reviewing those documents, some interesting and useful 
facts came to light that will be helpful as we craft banking reform 
legislation. More important for what we are talking about today, some 
of those documents contain new information that raises serious 
questions about Chairman Bernanke's judgment, leadership, and personal 
role in the AIG bailout. Unfortunately, under the agreement with the 
Fed to get access to those documents, I am not allowed to talk about 
the details and I was not able to bring copies back to show to other 
Senators. I think that every Senator should be able to see these 
documents prior to voting, and I asked Chairman Dodd to

[[Page 840]]

subpoena them this week, but that has not happened. Senators should be 
especially concerned about voting now because last week Chairman 
Bernanke himself asked the GAO to conduct a review of these same 
documents, but that review will not be completed and made public until 
after the vote has been taken here in the Senate.
  While all of the reasons I just mentioned are enough to vote against 
Chairman Bernanke, the simplest reason is that a vote for Ben Bernanke 
is a vote for bailouts. Chairman Bernanke has been in the middle of all 
of the financial bailouts during this crisis. It was his Fed that 
bailed out Bear Stearns in March of 2008. It was his Fed that bailed 
out AIG in September of 2008. And it was Chairman Bernanke along with 
Secretary Paulson who came to Congress begging for TARP. So if you like 
those bailouts, by all means vote for Chairman Bernanke. But if you 
want to put an end to bailouts and send a message to Wall Street this 
vote is your chance.
  I urge you to vote no on the confirmation of Chairman Ben Bernanke 
for another 4-year term as Fed chairman.
  I yield the floor and reserve my time.
  The PRESIDING OFFICER. The Senator from Connecticut is recognized.
  Mr. DODD. Mr. President, I will address the Senate for 3 minutes, if 
I can, and then reserve the remainder of my time for later in this 
debate.
  Let me say to my friend and colleague from Kentucky, a member of our 
committee, and a worthwhile member of the committee, that while we 
disagree on this nomination, I am appreciative and he raises good 
questions with a great deal of passion and conviction on these matters. 
I appreciate his gracious comments about my efforts to try to 
accommodate his legitimate interests in learning as much as we can 
about the matter affecting AIG, where $180 billion of taxpayer money 
was involved.
  There are a lot of investigations going on by the GAO, as well as by 
the independent commission, as well as individual Senators getting 
information. While it may not be satisfactory to everyone, there is an 
effort being made to make sure people can be as informed as they 
possibly can about that matter. There is a hearing that went on on the 
House side on this issue.
  The matter before us is obviously whether to confirm Mr. Bernanke as 
Chairman of the Federal Reserve for a second term. I am a strong 
supporter of this nomination. I will explain why briefly, and then I 
will complete my remarks a little later in the debate.
  I have yet to meet a nominee I have voted for that I was 100 percent 
for. But when it comes to a nominee with a record that is not going to 
necessarily be embraced by all 100 people here, the issue of certainly 
looking back is important to do. But the most important issue relative 
to the questions of looking back or forward is--and I think most 
Americans would agree--where are we today, and where are we going in 
these matters. I believe over the last year--or a little more than a 
year--the chairmanship of Ben Bernanke has, in no small measure, made 
it possible for this Nation to avoid a catastrophe that I think would 
have looked maybe larger than the Great Depression did because of the 
global decisions that needed to be made. Had it not been for Ben 
Bernanke, I think we would be looking at a very different America 
today.
  It wasn't my choice that Mr. Bernanke become Chairman of the Federal 
Reserve. The previous administration nominated Mr. Bernanke, and I 
voted for him. When I became chairman of the Banking Committee in 
January 2007 for the first time, I went through a very frustrating year 
on that committee. On February 7 of 2007, I had my first hearings in 
the issue of the mortgage crisis in the country. We had 12 such 
hearings in this committee over the remaining 10 months--almost 1 every 
month on this issue. Yet, I could not get the Chairman of the Federal 
Reserve to pay as much attention as I thought he should have. Beginning 
in the latter part of 2007 and going forward, his leadership, in my 
view, was absolutely critical in avoiding the kinds of problems this 
country faced.
  I will speak for a few more minutes later. I think we would make a 
great error indeed if we were to reject this nomination, if we do not 
terminate this filibuster and vote up or down on this nominee and 
provide the confidence and stability our markets demand. This economy, 
as fragile as it is, will get back on its feet again. To do otherwise 
would do great damage to our Nation at this critical moment.
  I yield the floor and withhold the balance of my time.
  I yield 5 minutes to the Senator from Rhode Island.
  The PRESIDING OFFICER. The Senator from Rhode Island is recognized.
  Mr. WHITEHOUSE. Mr. President, I wish to comment today on the 
nomination of Ben Bernanke for a second term at his critical post on 
the Federal Reserve.
  As our Nation continues to recover from the worst financial crisis 
since Black Tuesday in 1929 and the deepest recession since the Great 
Depression, the chairman of the Federal Reserve is one of the most 
important positions in the Federal Government.
  Earlier this month, Goldman Sachs--the Wall Street behemoth--
announced a bonus pool of $16.2 billion. JP Morgan recently handed out 
a $9.3 billion set of bonus payments. The Wall Street Journal reports 
that Bank of America is expected to match the bonus level that it paid 
in 2007--prior to the collapse of the financial bubble and the taxpayer 
bailout.
  These bonuses make it clear that Wall Street has recovered from the 
economic downturn--a recovery further indicated by the TED spread, 
which fell today to 0.17, signaling recovery for the banking system.
  In contrast to the restored prosperity being enjoyed on Wall Street, 
Americans on Main Street still struggle through the aftermath of the 
Bush recession. Unemployment nationwide hovers around 10 percent. In 
some especially distressed areas, such as my State of Rhode Island, the 
employment situation is even worse. Rhode Island's official 
unemployment rate was 12.9 percent last month and the proportion of 
Rhode Islanders who are underemployed, working part time, or at jobs 
below their skill level is considerably worse than that.
  Families in my State and across the Nation are struggling to pay for 
groceries and to stave off foreclosure. The economic distress is so 
widespread in places such as Rhode Island that hardly anyone remains 
untouched, directly or indirectly. It is heartbreaking to drive around 
parts of Providence, where nearly every house on the block is boarded 
up, where families have been evicted from their homes, and the 
neighborhood is now in physical decay. The explosion of the housing 
bubble left wreckage across this Nation, which will take years, perhaps 
even decades, to clean up.
  Ben Bernanke bears considerable responsibility for the lax regulation 
that brought about the housing bubble. There is no mea culpa he can 
profess that will erase that fact from history. And to make matters 
worse, a quick review of his public statements in the months leading up 
to the crisis demonstrates a troubling pattern of false confidence.
  On February 27, 2008, months before the start of our great recession, 
Chairman Bernanke said this:

       The nonfinancial business sector remains in good financial 
     condition with strong profits, liquid balance sheets, and 
     corporate leverage near historic lows. . . . By 2010, our 
     most recent projections show output growth picking up to 
     rates close to or a little above its longer term trend, and 
     the unemployment rate edging lower.

  Here we stand in 2010, and it could not be more clear that Mr. 
Bernanke was wrong.
  Regarding the housing crisis, on May 17, 2007, Chairman Bernanke 
said:

       We do not expect significant spillovers from the subprime 
     market to the rest of the economy or to the financial system.

  Again, he could not have been more wrong.
  Regarding the strength of our financial sector, on February 28, 2008, 
Chairman Bernanke said:

       Among the largest banks, the capital ratios remain good and 
     I don't expect any serious problems.

  We need a Fed Chairman with the foresight to anticipate problems and 
to

[[Page 841]]

take action before they occur. Chairman Bernanke has clearly not 
demonstrated this capability.
  As the President of the United States noted in his State of the Union 
Address last night, the bank bailout was about as popular as a root 
canal. It appears Chairman Bernanke will be reconfirmed, but I want to 
express with my vote that the leaders of President Obama's economic 
team must pivot from the necessary rescue of our major financial 
institutions to equally if not more necessary help to America's 
families.
  In prioritizing the recovery of Wall Street, I believe leaders at the 
Fed and the Treasury made significant errors in several key areas:
  First, failing to establish a due process mechanism to legally make 
adjustments to Wall Street pay, bonuses, and counterparty liabilities, 
so they all had to be paid 100 cents on the dollar.
  Second, hoarding the TARP reserve for banks, long after banks were 
secure, when families were desperate for help. But, no, they clung to 
that reserve just in case the banks needed it, never mind the present 
need of American families.
  Third, allowing the banks to prevent families--and this Chamber 
fighting against it--access to bankruptcy courts to readjust their home 
mortgage debts the way any other debtor can do for any debt, including 
the big banks themselves.
  Fourth, giving banks and investment banks unlimited access to zero-
percent loans at the Fed window to use for arbitrage, while profitable 
small businesses are desperate for credit to use for jobs. Other 
nations--the UK and France--have announced special taxes on banker 
bonuses to help pay for bailouts. Not here. If you are a scorekeeper of 
our recovery, it looks as if it can be summarized in a two-word phrase: 
bank wins. That is not a balanced score.
  I will conclude by saying that whoever leads the Fed for the next 4 
years, I urge that we start prioritizing help for the middle class. The 
Fed has enormous powers that could be used to help people. It can 
regulate credit card rates. It can force big banks to reduce principal 
on underwater mortgages. It can provide credit to small businesses. If 
our Nation's central bank is to regain the confidence of the American 
people, its priorities must serve the American people.
  I thank the distinguished chairman. I yield the floor.
  The PRESIDING OFFICER. The Senator from New Hampshire is recognized.
  Mr. GREGG. Mr. President, I believe my time is being yielded off of 
Senator Shelby's time.
  I rise in support of the confirmation of Chairman Bernanke to another 
term as head of the Fed. There are a lot of reasons. Let's begin with 
the most obvious one because I think it is also one of the most 
important.
  In the fall of 2008, we were looking over a precipice of massive 
disaster to our financial structures in this Nation. We were at a point 
where it was a distinct possibility that the entire financial system of 
this country was going to implode. What would have been the 
implications of that had it occurred? What would have been the outcome 
of that had it occurred? Not only would we have lost the basic 
superstructure of our banking system in this country, which is at the 
essence of a strong economy, a good banking system, because credit, 
especially in our capitalist system, is a critical element in order to 
create prosperity--people have to be able to get credit in order to 
take risk and create jobs--but equally important, the implications to 
everyday Americans would have been overwhelming.
  I understand it is difficult for people to appreciate how severe that 
was because the event did not happen. But had it occurred, had the 
financial system collapsed, as I believe it probably would have, then 
everybody in this country would have found their lifestyle and their 
quality of life reduced, I suspect, because the capacity to just 
basically operate a business would have been significantly constricted. 
Just getting money from your bank would have been a problem. The 
ability to get loans would have disappeared for a while. It would have 
created a massive disruption in our economic structure which, it is 
projected by some, would have led to unemployment rates of as high as 
25 percent. I don't know if that is true, but those are the projections 
from some realistic people.
  This did not happen. Yes, we went into a very severe recession and, 
yes, that recession is still hurting Americans. There are still 
Americans hurting as a result of it. But the massive collapse did not 
occur. It did not occur because a few people stood up and took very 
aggressive action, much of which was totally new and out of the box in 
the way it proceeded.
  One of the two key players in this effort was the Secretary of the 
Treasury. The other key player was the Chairman of the Fed. Two 
Secretaries of the Treasury stood up and made the tough calls--Treasury 
Secretary Paulson and Treasury Secretary Geithner. But there was only 
one Fed Chairman throughout this whole period. He took the Fed down a 
path which it had never been down before. He injected over $2 trillion 
of liquidity into the economy. He basically allowed the Fed to become 
the lender of the Nation. Nobody had ever done that. The way he did it 
was extraordinary in its creativity, and the results were that the 
country's financial system did not collapse. Many Americans' everyday 
lives were not fundamentally disrupted because of the actions of 
Chairman Bernanke. He deserves credit for having been willing and 
courageous enough to have made these types of decisions. That was the 
type of leadership we needed--strong, definitive leadership at a moment 
of acute crisis. That is what Chairman Bernanke gave our Nation. He 
deserves to be confirmed just for that action alone.
  There is no question but you can Monday morning quarterback what he 
did and you can analyze it and you can probably say he should have done 
this better or that better. No question about that. But the fact is, 
the results of what he did accomplished the goal, which was to 
stabilize the financial institutions of this country. The way I 
describe it is as if you are coming to a bridge in a car with your 
family in it and the superstructure of that bridge is about to 
collapse. But somebody comes along and they fix the bridge just as you 
get on it. You drive over the bridge, and you did not even know it got 
fixed, but it was fixed. And if it had not been fixed, you would have 
had a disaster. That is what Chairman Bernanke and Treasury Secretaries 
Paulson and Geithner did for our Nation. He deserves to be reconfirmed 
for that reason.
  The second reason he needs to be reconfirmed, in my opinion, is 
because as we look forward, we are still looking at some very tough 
times. The money, the liquidity that was required to be put into the 
system--this $2 trillion--as the system recovers becomes a risk for the 
system. We all know that. If that liquidity is allowed to play itself 
out and to multiply, we could end up with a fairly significant 
inflationary event. As we all know, inflation is the cruelest tax of 
all because it devalues people's savings and it undermines the 
productivity of a nation.
  How this liquidity comes out of the markets, how we get this $2 
trillion-plus, as it has been multiplied, out of the system is going to 
be a very complicated but very important undertaking, and it is going 
to be primarily the responsibility of the Fed to do that. Chairman 
Bernanke has outlined fairly clearly, and I think in a very positive 
way, how he intends to accomplish that, how the Federal Reserve will 
start to draw down that liquidity. As far as I know, it is the only 
proposal out there that has any legitimacy, and it is an important 
proposal as we go prospectively. We need him in that spot not only out 
of respect because he did such a great job, an important job, and a 
successful job in stabilizing the financial situation of the late 2008 
and 2009 period but also because we need him to deal with the 
prospective problem. That is another reason to confirm him.

[[Page 842]]

  Some will argue that he should not be confirmed because for years he 
participated, along with Chairman Greenspan, in keeping the money 
supply, the rates on interest too low.
  That is a debatable point. I tend to think the rates were too low for 
too long. I think it is one of the reasons we ended up with this huge 
bubble in the real estate industry and it is one of the drivers, but I 
don't think that was the primary driver of what caused this financial 
downturn in this huge real estate bubble. The primary driver was a 
decoupling of the responsibility to lend constructively from the people 
who were actually doing the lending. We had a breakdown in underwriting 
standards, to put it quite simply. Because we had all these different 
people originating loans who had no real interest or vested interest in 
the loans because they were selling them and because a lot of our 
banking institutions had become lax in their underwriting standards, 
loans were being made to people who could not pay the loans back on 
assets which did not have the value to support the loan. People were 
not looking at the loans; they were looking at the fees they were going 
to get, and then they were selling the loans. When loans got sold, they 
got securitized, subdivided, and multiplied as to the implications. 
That was not the Fed's failure. To some degree, in their oversight of 
bank holding companies, one can argue it was the Fed's failure. I tend 
to put that more on the bank supervisor as the authorities who were 
specifically on the ground.
  So, yes, interest rates were kept too low too long, in my opinion. 
But is that a reason to reject him as Fed Chairman? I do not think so. 
That, again, is Monday morning quarterbacking. The real test of his 
ability to manage the money supply and to live up to the primary 
commitment of the Fed, which is to have sound money and a strong 
economy, was how he handled the crisis of late 2009 and, as a corollary 
into that, how he intends to handle the impending problems with the 
liquidity that is in the market and needs to come out of the market.
  As I said before, if I was looking around for someone to do this job, 
this would be the person I would want to have because I think he is the 
best person for the job. Is he perfect? No. Nobody is perfect anywhere. 
But has he proven himself to be an extraordinarily talented and 
aggressive leader who saw a crisis, managed it, and kept a lot of 
Americans from having a much more severe impact on their lifestyle as a 
result of his actions? Yes, he has, and I think that is the test.
  I certainly hope my colleagues will vote for him. I understand there 
is this populist fervor around here now. Populism has always been a 
heavy strain in our body politic in America. I understand populism 
usually has to have an enemy, and usually it has to be an enemy that 
can be hyperbolized into a conspiratorial group. And so the Fed, since 
it is separate from the formal government--intentionally so, and it has 
to be because we do not want the Congress managing our money supply. 
That would be a disaster. Look at what we do with the fiscal house. 
Think what we would do with the money supply. The Fed is a separate 
entity, and it is insular to a significant degree, and therefore it 
becomes an easy target for those who want to fire the flames of 
populism, both on the left and the right.
  I honestly regret that the President has joined in this exercise 
because I think he has thrown kerosene on the fire. Regrettably, the 
fire was blowing through his own Fed Chairman nominee. But it was a 
foolish thing to do because you don't know where the fire is going to 
go when populism gets ignited.
  Populism usually involves exaggeration, and it almost always involves 
misapplied purposes. The substance usually is very significantly 
different than the actual description of what the events are, and in 
this case that is true. The Fed is not some secretive institution which 
is trying to undermine the quality of life in America; just the 
opposite. The Fed is a very public institution that is audited, fairly 
completely, with the exception of the open market window, which 
shouldn't be audited because we don't want Congress managing money 
supply, and an audit of that responsibility would put the Congress in 
the business of managing the money supply.
  Not only does it not undermine America's prosperity, it is the key to 
America's prosperity--or one of the keys--because it maintains a sound 
money supply and because, in a time of crisis--such as we had in late 
2008--it is there to step up and make the tough decisions, independent 
of the political process, and it has proven it can do it.
  I would hope we wouldn't allow all this fervor to find fault with 
people to overwhelm an extremely talented nominee who deserves to be 
reconfirmed and whom we, quite honestly, need in that position--as 
Chairman of the Federal Reserve.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Oregon is recognized.
  Mr. MERKLEY. Mr. President, I rise to oppose the nomination of Ben 
Bernanke as Chairman of the Fed. I do so as a member of the Banking 
Committee who voted against his nomination in that committee because I 
researched his record, and on that record I believe Ben Bernanke is not 
the right person to lead the Fed. In short, Ben Bernanke's decisions 
over the last 8 years as a member of the Federal Reserve Board, as 
Chairman of the Council of Economic Advisers, and as Chairman of the 
Fed helped set the fire that destroyed our economy.
  Mr. Bernanke is a calm and unassuming man, responsive and thorough in 
his explanations, and very likable. In addition, to keep the analogy, 
he has done a good job with the firehose over the last year. He 
understood that tightening credit during a collapsing bubble in the 
economy would be akin to turning off the fire hydrant in the middle of 
a fire. He did keep the fire hydrant turned on, and I give him credit 
for that. But now we need to rebuild our economic house. That takes an 
architect, not a fireman; that takes a builder, not someone turning on 
a fire hydrant. Based on his performance over the last 8 years, I do 
not believe Ben Bernanke is the right architect to rebuild our economy, 
an economy that will work for working families.
  Consider the following: Ben Bernanke failed to react to the enormous 
danger from an interlocking web of derivatives that created high-speed 
channels for massive financial contagion. Simply put: Derivatives turn 
our financial institutions into a set of dominoes in which, if one 
falls, others fall, and Ben Bernanke did not respond to the growing 
threat of derivatives.
  Bernanke failed to respond to the increase of proprietary trading 
that amplified risk in both depository lending institutions and our 
financial system as a whole. Again, let me put this more simply. 
Gambling on stocks and bonds and derivatives is fundamentally 
incompatible with bank stability. But Bernanke did not respond. Ben 
Bernanke supported and advocated for policies that reduced capital and 
increased leverage in both commercial banks and investment banks, 
greatly magnifying risk across the system.
  He supported Greenspan's philosophy of deregulation and self-
regulation. He advocated for Basel II. What was Basel II? Basel II was 
to say to the largest banks in America: You can set your own leverage 
ratios. What did that result in? That resulted in banks going to a 30-
to-1 leverage. If you invest money 30 to 1 in an up market, it is a 
killing. You make all kinds of money. But when you are at a 30-to-1 
leverage and the market turns down, you blow up immediately.
  There is not an analyst in America who can tell you at any one moment 
when the market will go up and when the market will go down. But they 
can tell you it will go up and down over a period of time. What goes up 
must come down. There is never going to be a steady upward climb 
forever. So if you allow 30-to-1 leverage, you are going to make a lot 
of financial institutions very happy. They are going to make a lot of 
money, until the market turns down. Well, Ben Bernanke set loose the 
leverage requirements that paved the path, that set this fire, that 
burned down our economy.

[[Page 843]]

  Ben Bernanke ignored the housing bubble. He failed to protect 
homeowners from deceptive practice committees. Why is this important? 
Let me explain what happened over those 8 years. Families went to their 
real estate agent and the real estate agent followed a strict code of 
conduct--a strict code of ethics--and they arranged to buy a house. 
They then went to a broker and assumed there would be a similar strict 
code of ethics and they were going to get a loan for their house. The 
broker said: You know what, home ownership has gotten very complicated; 
mortgages have gotten very complicated; I am going to be your adviser. 
I am going to be your adviser, trust me, and sign this loan right here. 
This will be the best one for you.
  What was wrong with that was the homeowner did not know the broker 
was getting paid a large sum of money, called a yield spread premium, 
also known as a steering payment because they were designed to steer 
people into certain loans, also known as a kickback. The broker was 
receiving those, and families who qualified for prime loans ended up in 
subprime loans.
  What institution was responsible for consumer protection on 
mortgages? The Fed was responsible. Ben Bernanke did not do a thing to 
protect consumers from this gross conflict of interest that torpedoed 
the financial prospects of millions of America's families for which he 
had direct responsibility.
  In the Fed, monetary policy has been in the penthouse, as it must be. 
That is a primary responsibility--safety and soundness in the upper 
floors and consumer protection in the basement. We cannot leave 
consumer protection in the basement.
  So I will close with this. Ben Bernanke was not alone in helping to 
set this fire. He had a lot of company. But over 8 years, he made 
critical mistake after critical mistake that, in the short-term, large 
financial institutions loved, but it set the conditions for our economy 
to burn down. The consequences for families were extraordinary--loss of 
jobs, loss of retirement, loss of savings. With the loss of a job came 
the loss of health care. That is an extraordinary amount of damage. Now 
we need someone to rebuild our economy, and Ben Bernanke is not that 
man.
  The PRESIDING OFFICER. The Senator from Arkansas is recognized.
  Mr. PRYOR. Mr. President, I ask unanimous consent to speak as in 
morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                      Departure of Robert Russell

  Mr. PRYOR. Mr. President, Holmes had Watson, Mat Dillon had Chester, 
even Andy had Barney; for the past 20 years, I have had Bob Russell. 
Bob has long been a trusted friend, and for the past 7 years he has 
been my great chief of staff, providing valuable counsel, know-how, and 
humor. Bob is headed to the private sector, but I could not let him 
leave without thanking him for his public service in the Arkansas 
attorney general's office and in the Senate.
  Bob was instrumental in assembling an exceptional team of talented 
aides, many of whom are in the gallery today. Over the last 7 years, he 
led that team as we steered a number of legislative initiatives to 
success, including legislation to improve children's safety, help 
military families, and strengthen Arkansas communities. None of these 
accomplishments would have been possible without Bob's hard work, 
integrity, and deliberation.
  Bob believes in the ``do right'' rule. He came to the Senate to get 
these done for Arkansas, and when he realized that partisanship was 
getting in the way, he took action. Along with Tom Ingram, former chief 
of staff to Lamar Alexander, he formed the bipartisan chiefs of staff 
group. This informal group meets regularly to facilitate working 
relationships across the aisle. These friendships translate into 
solutions instead of barriers.
  The so-called Gang of 14 is a prime example, where Bob and Tom 
recognized early on that common ground on Federal judges was more 
favorable than Senate gridlock. Just a few weeks later, 14 Senators, 
including myself, struck a deal that enabled the Senate to move forward 
with the judicial nominations and conduct regular business. That is the 
type of unseen influence Bob Russell has had on this place for the last 
7 years.
  I love Bob and I trust him. He is a good family man and he is a good 
Southern Baptist. On many Mondays, we would come in and say: Tell me 
about your sermon on Sunday. I will miss his presence and his insights. 
He has been a good mentor and adviser to me and to many on my staff and 
has made many lifelong friendships here in Washington. He is more than 
a chief of staff, he is my friend.
  Frank Broyles is an Arkansas hero, well-loved for coaching the 
Razorbacks to a national championship and famous for developing 
assistant coaches. One of his players was Jimmy Johnson, who would 
later coach as an assistant at Arkansas under Broyles. It is tough to 
let an assistant coach go, but when he is that good, he deserves to go 
out and do great things on his own. I feel the same way about Bob, 
especially since I know that Ecclesiastes says:

       For everything there is a season, and a time for every 
     matter under Heaven.

  Johnson went on to win a national championship and two Super Bowls. I 
know Bob will go on to a highly successful career in his own right.
  The PRESIDING OFFICER. The Senator from Texas is recognized.
  Mrs. HUTCHISON. Mr. President, I rise to speak in opposition to the 
nomination of the Honorable Ben Bernanke to be Chairman of the Board of 
Governors of the Federal Reserve System.
  I am somewhat conflicted about Dr. Bernanke's nomination for a second 
term as Chairman of the Federal Reserve. Our Nation's economy is still 
reeling from a significant downturn, during which home values plummeted 
and foreclosures rapidly increased, wreaking havoc on our financial 
system. Markets tumbled, banks and businesses failed, and millions of 
jobs were lost. Ultimately, the American people have borne the brunt of 
this recession, watching jobs, homes, and life savings vanish, while 
seeing their hard-earned tax dollars bail out the bad actors that 
caused it.
  That being said, the financial crisis could have been worse. It could 
have turned into a depression. So far, we are not there. I believe some 
of what Dr. Bernanke did was good. He is an expert on the Great 
Depression. He unleashed an arsenal of financial tools to combat the 
recession, he tried to inject liquidity into the financial sector, and 
did much to try to keep our markets afloat. While I commend him for 
that, I am very concerned about some of the precedent that has been set 
in this crisis.
  I am especially troubled by the continuing expansion of TARP. Almost 
immediately after its passage, the Treasury Department deviated from 
the intent of the program. Instead of purchasing troubled assets, which 
we were told would be the purpose, the Treasury purchased equity stakes 
in over 300 of our Nation's financial institutions. It expanded the 
TARP to nonfinancial companies, pouring billions into AIG, General 
Motors, and Chrysler.
  We must begin the effort to wind down TARP. With banks paying back 
their TARP receipts, we need to unwind TARP and pay down the deficit. 
Although some have suggested TARP is a revolving fund, the legislation 
was never sold as such--not ever. Americans are tired of excessive 
spending. If there is anything we ought to do right now, it is to stop 
spending TARP and stimulus funds that are not allocated and show the 
American people we have heard the message in Washington.
  TARP was designed as a one-time injection of assistance to prevent 
financial institutions from collapsing and taking down the larger 
economy. Now that those financial institutions have gained their 
footing, we should pay back the American taxpayer. In bailing out our 
Nation's financial system and large banks, we have left the very real 
impression that no bank is too big to fail. This policy has allowed 
those who contributed to bringing our economy to its knees to right 
their ship at taxpayers' expense. It has helped these institutions 
access cheap capital from the government, adversely affecting

[[Page 844]]

safe and sound institutions such as community banks.
  I am also concerned about the path our country is on in our recovery. 
In September, Chairman Bernanke said our recession was over. While our 
economy may be recovering, many Americans do not see it. At 10 percent, 
our national unemployment is still extraordinarily high, despite huge 
spending measures such as the stimulus package, which was supposed to 
create jobs. The debt and deficits our Nation has incurred over the 
past 2 years has sent our Nation's debt on an unsustainable trajectory.
  Our debt is at $12.394 trillion. Earlier today, the Senate voted to 
once again raise the ceiling by an astonishing almost $2 trillion, the 
fifth time to do so in 18 months.
  Under Chairman Bernanke's leadership, I do not think the Fed has paid 
enough attention to--nor has he talked enough about--the mounting debt 
and the immense burden it is going to place on our economy today and 
certainly on our children and grandchildren.
  Fiscal sustainability is not on the horizon. Instead, we see endless 
spending as far as the eye can see: health care reform, cap-and-trade 
energy legislation, a possible second stimulus. All will be huge 
government programs which will not only raise our government spending 
but raise costs on individuals and businesses in the form of new taxes 
and mandates. I am concerned about the consequences this increase in 
spending will have on our economy.
  I will not support Chairman Bernanke's nomination. I am conflicted, 
as some of the things he did were good, but his actions to save our 
economy have helped set a very dangerous precedent for the future. The 
precedent of massive spending is not the answer.
  I will continue to examine the Fed's exit strategy and will most 
certainly encourage further action from Chairman Bernanke on our debt 
and our Nation's finances.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from New York is recognized.
  Mr. SCHUMER. Mr. President, I ask 4 minutes be taken from the 
Democratic side's time?
  Mr. DODD. That is fine. I know the Senator from North Dakota had 
asked to be heard.
  Mr. SCHUMER. I thought I was next.
  Mr. President, it was only a little over a year ago, with the 
collapse of Lehman Brothers, that we faced a financial crisis the likes 
of which few have seen in our lifetime. We were truly standing on the 
edge and staring into the abyss. For all intents and purposes the 
financial system was on the cusp of a total breakdown. A Great 
Depression loomed.
  Now, a year later, while we cannot diminish the very real and large 
problems that remain in front of us, we did succeed in preventing the 
catastrophe that seemed very possible if not probable in the fall of 
2000. Nobody was more important in preventing the collapse of the 
financial system and the rescue of the economy from what looked like 
imminent freefall than was Chairman Bernanke.
  I was there at many of the meetings, and I saw his steady hand and 
guidance. That is why I am going to vote to reconfirm him as Chairman 
of the Federal Reserve Board.
  The Fed certainly made mistakes in the runup to the financial crisis: 
failing to use its regulatory authority to rein in a skyrocketing 
credit boom, failing to adequately fulfill its responsibility to 
protect consumers from predatory lending practices in mortgages and 
elsewhere, and allowing too risky activities with too little 
protection.
  While most of these policies began under the previous Chairmen, 
Chairman Bernanke presided over the Fed and continued them. That is 
something I am sure he is not proud of, but he has acknowledged that he 
has many lessons to learn from the crisis and he is working hard to 
make sure the same mistakes are not repeated in the future.
  I also want to say a word about the consequences of failing to 
reconfirm him. Our economy, while struggling to return to solid ground, 
remains fragile. Unemployment is way too high. We have yet to turn the 
corner on sustained job growth. Businesses, small and large, are still 
having a hard time getting access to credit they need to expand and 
grow, or even, in many cases, doing business as usual.
  Singling out Chairman Bernanke and the Fed for punishment might be 
temporarily satisfying for some, but it will not help a single business 
add jobs. It will not prevent a single homeowner from being kicked out 
of his or her house. Instead, it will accomplish just the opposite. By 
sending a message that the Federal Reserve and its monetary policy 
decisions are under the thumb of Congress, businesses will be faced 
with the prospect that the Fed might not be able to do what is 
necessary for the economy because of pressure from Congress.
  Economists tell us one of the major things holding the economy back 
is uncertainty about the policies that Washington will pursue. This 
would exacerbate that concern and create a very bad outcome for the 
economy and the country. I have said it before, and I will say it 
again: If you don't like monetary policy when the Fed does it, just 
wait until the politicians get their hands on it.
  I am going to vote to reconfirm Chairman Bernanke as Fed chairman, 
and I urge my colleagues to do the same.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Arizona is recognized.
  Mr. KYL. Mr. President, when I think of what a Federal Reserve 
Chairman is supposed to do, I think of two key responsibilities: 
maintaining stable prices and keeping our dollar strong. Unfortunately, 
Chairman Bernanke's Federal Reserve has not performed well on either 
count.
  Consumer inflation, as measured by the Bureau of Labor Statistics, 
increased 2.9 percent from June to December 2009.
  Manufacturers' cost of production is up 4.4 percent versus last year; 
up 5 percent in the past 6 months; and up 9.5 percent in the past 3 
months.
  Other measures of inflation, such as the 5-year, 5-year forward, 
clearly show an accelerating trend. Inflation is the last thing our 
economy needs right now.
  As for the dollar, during the last year, its value dropped more than 
10 percent. Much of this weakness is attributable to the Federal 
Reserve setting short-term interest rates at virtually zero.
  As such, gold prices have surged, as investors worry that the dollar 
is no longer a reliable store of value.
  OPEC has contemplated designating oil in a currency other than the 
dollar, and foreign economists have suggested that we issue our own 
government debt in yen, euros, or yuan, rather than dollars.
  While neither of these actions is likely, it is clear that the 
Federal Reserve needs to pay greater attention to the dollar's value 
when making monetary-policy decisions. The preeminence of the dollar is 
synonymous with American prestige abroad. Nothing represents our 
Nation's soft power more than its strength.
  Another chief concern of mine is that, during Chairman Bernanke's 
tenure, the Federal Reserve and other banking regulators showed an 
inability to use bank examinations to distinguish between good and bad 
loans.
  Before the housing crisis, banking regulators were permitting 
financial institutions to lend to individuals who obviously did not 
have the ability to repay the money they borrowed. Had they been more 
vigilant, the crisis may have been less severe.
  Now, however, in seeking to be more cautious, bank regulators are 
making another mistake: They have been telling institutions in my home 
State of Arizona, and throughout the country, not to make loans to even 
the most creditworthy individuals and businesses.
  I have heard numerous stories, from both lenders and borrowers in my 
State, about bank examiners deciding to downgrade a performing loan 
because, on paper, the underlying collateral was worth less than its 
purchase price.

[[Page 845]]

  As a result, the banks had to either raise more money, which is 
incredibly difficult, or else the borrower had to contribute more cash 
to keep from technically defaulting on the loan.
  Why would we have policies that punish responsible borrowers? Why 
would it be in our interest to force those who are current on their 
loans into a situation that could lead to bankruptcy? Doing so makes a 
bad situation worse and creates problems that ripple through our 
economy.
  I am also troubled that Chairman Bernanke refuses to take 
responsibility for the housing bubble and disputes that the Federal 
Reserve's lax monetary policy helped create it.
  As the respected columnist Bob Robb of the Arizona Republic recently 
explained:

       [Chairman] Bernanke is intellectually shadow boxing. . . . 
     When a bubble occurs in a commodity which is almost 
     universally purchased using extensive borrowing, such as 
     homes, it's fatuous to claim that easy money doesn't play a 
     significant role.

  Chairman Bernanke strongly supported this lax monetary policy, and he 
should own up to its role in the financial crisis.
  These are all reasons to oppose his renomination or confirmation. 
Nonetheless, I must vote to reconfirm Chairman Bernanke, simply because 
I am concerned that another nominee chosen by President Obama would be 
less independent than Chairman Bernanke and would direct the Federal 
Reserve's resources to support the administration's policy interests, 
and, therefore, bypass congressional approval for appropriated funds.
  This administration has a history of nominating partisan, out-of-the 
mainstream individuals for key jobs, and replacing Chairman Bernanke 
would be another opportunity for it to do so.
  I would hope that if Chairman Bernanke is confirmed, he will take 
action to remedy the problems I have just addressed. They demand his 
attention.
  The PRESIDING OFFICER. The Senator from North Dakota is recognized.
  Mr. CONRAD. Mr. President, I rise in support of the confirmation of 
Mr. Bernanke to continue as Chairman of the Federal Reserve. I do so, 
acknowledging that he contributed to the crisis, but also recognizing 
that without his strong leadership the crisis might have become a 
conflagration.
  How did we get to the brink of financial collapse? I might say to 
some of my colleagues, they should look in the mirror because they, 
too, contributed to the forming of the bubble. How? An overly loose 
fiscal policy under the control of the Congress and the administration.
  The previous administration ran up massive deficits, doubled the 
debt. That is a loose fiscal policy. It was accompanied by a loose 
monetary policy after 9/11.
  After 9/11, the Federal Reserve kept interest rates very low, flooded 
the system with money, and the combination of an overly loose fiscal 
policy and an overly loose monetary policy created the seed bed for 
bubbles to form. Indeed they did.
  We didn't just have a housing bubble, we had an energy bubble--oil 
prices went to $100 a barrel. We had a commodity bubble--wheat went to 
more than $20 a bushel. These are examples and evidence of bubbles 
being formed. When you have an overly loose monetary policy and an 
overly loose fiscal policy, bubbles are going to form and ultimately 
bubbles burst. When they do, there is enormous economic wreckage. That 
is what has occurred here--all of it coupled with an era of 
deregulation.
  Under the previous administration--and, yes, the Federal Reserve has 
responsibility here as well--there was too little regulation of major 
financial institutions and of major financial instruments. Trillions of 
dollars of derivative instruments were floating around the world 
unregulated, even unrecorded. Of course there was danger there.
  Warren Buffett warned that derivatives constituted a nuclear time 
bomb hanging over the global economy. Ultimately the bubbles burst, and 
ultimately the economic wreckage built. Bernanke bears some 
responsibility for that, without doubt. But once the crisis developed 
he took charge in a way that is unprecedented. He took step after step 
to provide liquidity to this global economy to prevent and avert a 
collapse.
  I believe when the history of this period is written, in terms of the 
response to the dangerous cloud hanging over this global economy, 
Bernanke will prove to have been one of the heroes of the piece. In 
instance after instance, he took unprecedented action to avert a 
collapse.
  His academic study was the Great Depression.
  He resolved as a young man to do everything he could to prevent any 
future collapse of that magnitude. He proved to be the right man at the 
right time. He deserves to be confirmed in this vote this afternoon. I 
ask my colleagues to please be judicious. Let's recognize that he made 
serious mistakes. Let's also admit the Congress and the administration, 
the previous administration, made very serious mistakes: overly loose 
fiscal policy, overly loose monetary policy, a lack of regulation, the 
creation of bubbles, bubbles that burst that created enormous wreckage. 
But Ben Bernanke helped avert a global financial collapse. I believe 
history will prove that is the truth.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Rhode Island is recognized.
  Mr. REED. Mr. President, I join my colleague, the Senator from North 
Dakota, in rising to support the confirmation of Chairman Ben Bernanke 
to a second term as Chairman of the Federal Reserve. As has been 
pointed out throughout the course of this debate, his position at the 
Federal Reserve prior to September 2008 gave him the opportunity and 
the obligation to look carefully at a building crisis.
  His response was not as perceptive or as adroit as we all in 
hindsight would wish to see. He did recognize, however, by August of 
2007 that this economy was slowing down, and he applied the traditional 
macroeconomic tools by beginning to lower the interest rate.
  By December of 2008, the interest rate was virtually zero, the 
Federal rate. That has helped, I think, keep the economy moving and has 
helped us move forward. But the point that so many of my colleagues 
have made is when it came to critical moments during the fall of 2008, 
Chairman Bernanke understood the problem and was able to use 
extraordinary measures, first persuading the Federal Reserve to follow 
his lead, and then using extraordinary measures to begin to blunt the 
worst effects of this economic crisis we faced, and continue to face, 
and his efforts to ensure that there was liquidity in the system--
precisely what was done incorrectly in 1929, 1930 through the early 
1930s, where the Federal Reserve pulled back, accelerating the 
depression rather than cushioning the economy from further decline.
  He took innovative steps that seem sort of esoteric, but helped 
restore stability in capital markets. But he also took very decisive 
intervention with respect to the money market mutual funds, when the 
Reserve Fund broke the buck, as they say, when its net asset value 
dropped below a dollar, there was a tremendous sense of not only 
uncertainty but potential chaos as everyone was plotting to withdraw 
their funds from money markets, which would have created huge problems 
and which would have affected every American in this country. But he 
moved decisively and aggressively, along with the Treasury Department, 
to provide stability and support. He also helped create programs like 
the TALF program to restart markets for auto, home, credit card, 
student loan, and small business loans, his ability to interject 
liquidity into the system, gave us a break, if you will, from a rapidly 
deteriorating situation.
  I sense, and my colleagues have said, that in the future his 
reaction--calm, decisive, innovative, imaginative--was one of the 
things that prevented this catastrophic situation from becoming even 
worse. That is an important aspect that we must consider in regards to 
his renomination.
  There is something else too. If the Chairman is not confirmed, there 
will

[[Page 846]]

be a period of uncertainty as to who is leading the Federal Reserve and 
what direction will it take. The last thing we need today is 
uncertainty in our economic future. If the ability of individuals and 
institutions to invest, to commit their capital and their effort and 
their work is put on hold, then the progress we have seen--and it is 
not sufficient but we have seen some--in fact, there are expectations 
that the reports on gross domestic product tomorrow will show 
significant increases rather than significant contractions, which is 
what we saw under the last administration.
  But if we inject this uncertainty, if we go months and months with no 
one clearly in charge at the Federal Reserve, it will have a very 
tangible, rapid, and unfortunate effect on our ability to move forward 
with the economy.
  There is another issue here I think that is important to note. That 
other issue is that, having done all of these remarkable innovative 
programs to increase liquidity, to keep the engine of the economy 
running, albeit not at the level and speed and power we might want, but 
keep it moving, at some point those programs have to be unraveled, 
pulled back, because we will face another danger.
  We face a danger, perhaps, in terms of inflation rate effects. We 
face a danger in terms of currency issues, in terms of value of the 
dollar. This is something we all recognize, this great pivot, as I call 
it, moving away from low interest rates and liquidity infusion, to 
higher interest rates, the dismantling of some of these programs. For 
example, the Fed already announced that it intends to begin to slowly 
get out of its support for the mortgage market in a few weeks.
  All of that has to be as tacitly managed, as carefully understood, as 
these programs were in the fall of 2008 and 2009 when the Chairman was 
moving forward. As a result, I think we need someone who understands 
these programs, and understands them not just theoretically but 
literally from trial and error, from understanding what worked, what 
did not work, what the consequences are.
  No one has that type of knowledge and insight at this juncture other 
than Chairman Bernanke. He is, of course, as an individual, a man of 
remarkable integrity and character who is committed to public service, 
and who is a pragmatist, not an ideologue, someone who will continue to 
provide not only guidance but leadership at a place we sorely need it, 
at the Federal Reserve. From my talks with Chairman Bernanke, I think 
he understands that people are hurting, and that his role in getting 
our country back to full employment is just as important as his role in 
monetary policy. The engines of our economy are small businesses and 
jobs, and this is what people in my state of Rhode Island expect from 
the Federal Reserve. At this critical juncture, I hope that my 
colleagues will support Chairman Bernanke for a second term.
  I yield the floor.
  Mr. AKAKA. Mr. President, I support the confirmation of Chairman Ben 
Bernanke. Chairman Bernanke has demonstrated tremendous skill in 
handling extraordinary economic challenges. We were very fortunate that 
the Chairman of the Federal Reserve Board of Governors during the 
economic chaos last fall was an individual whose area of academic 
expertise is the Great Depression. The Federal Reserve took 
unprecedented emergency actions that helped stabilize the economy and 
prevent further collapse of the financial markets.
  During my first meeting with the Chairman, he shared with me his 
experience as a school board member of trying to improve the 
availability of financial education. I have always greatly appreciated 
Chairman Bernanke's dedicated efforts to improve the financial literacy 
of students and consumers. The true costs of financial illiteracy have 
been made all too apparent by the financial crisis. One of the core 
causes of the crisis was that families were steered into mortgages with 
risks and costs they could not afford or even understand. Chairman 
Bernanke and I share a firm commitment to trying to improve the lives 
of working families through improved consumer protections and financial 
literacy.
  Chairman Bernanke has led efforts at the Federal Reserve to better 
protect and inform consumers. During Chairman Bernanke's tenure, the 
Federal Reserve has increased consumer protections in the subprime 
mortgage market and limited questionable practices in the broader 
mortgage market. Additionally, the board has proposed further 
limitations on loan originators, brokers, and loan officers.
  Also during Chairman Bernanke's tenure, the Federal Reserve developed 
improved rules to restrict credit card practices, enhance overdraft fee 
disclosures, strengthen student loan disclosures, and restrict gift 
card fees.
  I have also greatly appreciated the efforts of Chairman Bernanke and 
the Federal Reserve to promote the use of financial institutions for 
lower cost remittances. Too often consumers fail to take advantage of 
lower cost remittance services found at banks and credit unions. 
Remittances can be helpful in providing opportunities for the unbanked 
to utilize mainstream financial institutions.
  I look forward to continuing to work with Chairman Bernanke and the 
Federal Reserve to better protect, educate, and empower consumers.
  Mr. LEVIN. Mr. President, we have been asked by the President to 
confirm Ben Bernanke to a second term as Chairman of the Federal 
Reserve. Given the current state of the economy, and the nature of the 
crisis that led to the recession from which we are struggling to 
recover, this request has generated a great deal of controversy. I am 
conflicted by this nomination, and I want to explain my decision to 
support it.
  The most striking feature of the economic crisis is that it was, to a 
large extent, a collective failure of financial regulation. It was not 
a function of the normal waxing and waning of the economic cycle. 
Instead, our financial institutions engaged in ever-more complex, 
highly dubious, and risky transactions, and when the risk was exposed, 
it set off a chain reaction that dragged down our entire economy.
  The lack of adequate financial regulations was a major cause of the 
crisis. We must reform that system on an urgent basis. Consumers' 
rights need to be protected.
  But in addition to the failures of the system, part of the crisis was 
made possible by collective failures of those entrusted to oversee the 
financial system. Chairman Bernanke was one of those people. He and 
others should have been more forceful in reining in the greed-driven 
abuses and excesses of our financial sector.
  Some of my colleagues who share this view believe that this fact 
alone should justify a ``no'' vote on Chairman Bernanke. But I believe 
that we must weigh both Chairman Bernanke's role and actions before the 
crisis, but also those since the crisis began. In other words, was he a 
bigger part of the problem or the solution?
  First, while Chairman Bernanke should have acted more forcefully to 
try to prevent the crisis, most of the abuses that brought it about 
occurred in areas outside the Federal Reserve's primary areas of 
oversight. I also believe that Chairman Bernanke's and the Federal 
Reserve's recent support for enhanced financial regulation are crucial 
to correcting some of the structural failures that led to the crisis.
  Second, the Federal Reserve's actions helped to prevent this tragic 
recession from becoming a second Great Depression. This is no small 
thing. As bad as the last several months have been, they would have 
been even worse but for Chairman Bernanke's leadership.
  Lastly, it is clear that Chairman Bernanke's role in preventing a 
deeper crisis has earned him some confidence in our financial markets. 
A defeat of his renomination carries the risk of shaking these markets, 
at the very moment we need them to operate in a stable fashion so as to 
help boost our fragile economic recovery.
  When making the decision of whether to support this nomination, I end 
up believing that Chairman Bernanke's performance in addressing the 
economic crisis and his current efforts to

[[Page 847]]

significantly enhance financial regulation to help prevent future 
crises, outweigh his past mistakes. On balance, I believe that Chairman 
Bernanke should be given the opportunity to continue to help pull us 
through this difficult period, and I will vote in favor of his 
confirmation.
  Mr. GRASSLEY. Mr. President, I want to express my concern about the 
nomination of Ben Bernanke as Chairman of the Federal Reserve Board and 
explain why I will vote against him when the Senate has the opportunity 
this week.
  I know many of my colleagues will support Mr. Bernanke because he was 
a cocaptain of the U.S. economic recovery efforts in the last year and 
a half. Appointed by President Bush, Mr. Bernanke undoubtedly has a 
difficult job. Our Nation has been jolted by greed, corruption, fraud, 
and excessive risk-taking that led to the largest taxpayer bailout in 
history. Mr. Bernanke was holding the reins, along with officials in 
the Department of the Treasury, but steered us into an out-of-control 
spending frenzy with very little oversight by the American people.
  Ben Bernanke has been wrong about the economy. He was wrong about the 
subprime lending meltdown. He was apparently blind to the pitfalls of 
credit default swaps. He misled the American public about the purpose 
and intent of the Troubled Asset Relief Program. He recklessly spent 
billions of dollars on a few renegade financial firms, picking winners 
and losers on Wall Street and justified these actions by saying Main 
Street would be saved. Then, he stonewalled Congress from learning 
about how the billions of dollars were spent. Ben Bernanke also opposed 
transparency almost every step of the way.
  Let me address these issues more in depth.
  Whenever the Chairman of the Federal Reserve opines about the 
economy, he understands that his words can be misunderstood or taken 
out of context and thus have an unintended impact on the market and 
day-to-day trading. However, Ben Bernanke has been saying that our 
economy has been strong since the beginning of the decline. His 
analysis of the situation and predictions for our future economic 
growth were far off.
  Let's take the housing problems, for example. In 2006, Fed Chairman 
Bernanke believed that the housing market had been strong but could 
cool slightly. He said, ``Our expectation is that the decline in 
activity or the slowing in activity will be moderate, that house prices 
will probably continue to rise, but not at the pace that they had been 
rising. So we expect the housing market to cool, but not to change very 
sharply.'' He didn't think the housing market would blow up, nor did he 
believe that the weakness in the market would spill over to other 
sectors of the economy. He was dead wrong.
  He was wrong about unemployment. Most recently, in May of 2009 and in 
front of the Joint Economic Committee, Fed Chairman Bernanke said: 
``Currently, we don't think [the unemployment rate] will get to 10 
percent.'' In November the unemployment rate hit 10.2 percent.
  We can go back to February 2006. As President Bush's Chairman of the 
Council of Economic Advisers, Mr. Bernanke was responsible for drafting 
the Economic Report of the President which claimed the following: ``The 
economy has shifted from recovery to sustained expansion. . . . The 
U.S. economy continues to be well positioned for long-term growth.'' In 
this report, Bernanke projected the unemployment rate to be 5 percent 
from 2008 through 2011.
  Even in 2007, the Fed Chairman believed that the labor market would 
stay healthy and incomes would continue to rise. In February of that 
year, he said that ``the business sector remains in excellent financial 
condition.'' Later in July of 2007, Mr. Bernanke said, ``Employment 
should continue to expand. . . . The global economy continues to be 
strong. . . . financial markets have remained supportive of economic 
growth.''
  Then came the Bear Stearns debacle. Bear Stearns led the charge in 
the securitization market. Because they had placed significant 
resources in mortgage-backed securities, the company was on the verge 
of collapse. In March of 2008, the Federal Reserve Bank of New York 
attempted to save the company through an emergency loan, but failed and 
moved to force a sale to JPMorgan Chase.
  Three months later, Fed Chairman Bernanke still did not acknowledge 
the pending economic crisis. In fact, in June, he said, ``The risk that 
the economy has entered a substantial downturn appears to have 
diminished over the past month or so.'' He couldn't have been more 
wrong. The economy melted down, and the Fed and Department of the 
Treasury had to come to the rescue of several failing firms.
  The Federal Reserve Chairman only warned Congress about the financial 
crisis when it was too late. Under his leadership, the Federal Reserve 
took very little action to control the root causes that led us to the 
economic storm we have all had to endure. Instead, they urged Congress 
and the American people to swallow a plan that was ill conceived and 
risked making the situation worse.
  So another reason I cannot support his renomination as Chairman of 
the Board is because of the disastrous implementation of the Troubled 
Asset Relief Program, also known as TARP.
  Chairman Bernanke came to Congress with former Treasury Secretary 
Paulson, selling a proposal that would direct taxpayer money to 
purchase ``toxic assets.'' The proposal would have allowed the Federal 
Government to take bad assets off the books of troubled firms to keep 
credit flowing. We were told that the situation was dire. We were told 
that the Fed and the Treasury Department had a plan in place. We were 
told that taxpayers may even come out ahead. We were told to trust 
them.
  It wasn't long after the Emergency Economic Stability Act was passed 
in October 2008 that the Fed and the Treasury reversed course. Without 
input from Congress, they took the authority they were given and went 
their own way. Chairman Bernanke was doling out funds for Bear Stearns 
and AIG while the Treasury was doling out funds to firms that were 
destined for failure.
  Today, the Troubled Asset Relief Program has been used as a slush 
fund to bail out firms on Wall Street and troubled automakers. Taxpayer 
money has been enabling these companies to continue in their misguided 
ways. Corporate jets were being used to lobby Congress for billions of 
dollars, and CEOs resisted proposals to slim down the fat pockets of 
their cronies. The American people were misled, and Ben Bernanke should 
share responsibility for that.
  But, it wasn't just the Troubled Asset Relief Program that was used 
to funnel taxpayer money to failing firms. Chairman Bernanke led the 
Fed on a spending spree, using a blank check to unilaterally direct 
money to AIG, Fannie Mae, and Freddie Mac.
  Chairman Bernanke was AWOL as the Federal Reserve funneled billions 
of taxpayer dollars to AIG knowing that the money would go directly out 
the back door to AIG counterparties like Goldman Sachs and foreign 
banks. AIG's payment of 100 cents on the dollar for the counterparty 
securities meant Goldman actually received more than some other 
counterparties, because Goldman's securities had a market value of 40 
cents on the dollar while UBS Bank's securities, for example, were 
worth 71 cents on the dollar.
  Chairman Bernanke was absent from the critical ``haircut'' 
negotiations with the AIG counterparties, in stark contrast to the TARP 
Capital Purchase Program negotiations weeks earlier. As a consequence, 
no reductions in counterparty payments were obtained for the American 
taxpayer. These negotiations failed despite the fact that some of the 
foreign counterparties offered to reopen negotiations. The Federal 
Reserve failed to capitalize on this opportunity and investment bankers 
were paid in full.
  The AIG bailout was designed by the Fed in a manner that funneled 
billions of dollars directly to the counterparties. No other outcome 
was possible.

[[Page 848]]

 The effect was a ``backdoor bailout'' regardless of the Fed's now-
stated intent merely to improve AIG's liquidity in order to avoid a 
collapse.
  Reasonable people can disagree about whether Chairman Bernanke made 
the right decisions. Aside from the problems I have already outlined, I 
have serious reservations about voting for him again given his 
resistance to transparency. For example, we have seen very little 
cooperation from the Federal Reserve to ensure that the Government 
Accountability Office, GAO, has independent audit authority.
  Last March, the GAO testified before the Finance Committee that the 
Federal Reserve was resisting its efforts to conduct oversight of the 
response to the financial crisis by citing provisions of law that were 
intended to maintain the independence of monetary policy.
  Such restrictions could be defended when the Federal Reserve focused 
only on monetary policy. However, since the financial crisis, the 
Federal Reserve has routinely exercised extraordinary emergency powers 
to subsidize financial firms far above the levels Congress is willing 
to authorize through legislation. The Federal Reserve took on enormous 
amounts of risk in complicated and unprecedented ways. That risk is 
ultimately borne by the American taxpayer. Congress authorized $700 
billion in funds under TARP. However, the total projected assistance in 
various initiatives by the Federal Reserve could be up to $3.4 trillion 
by GAO estimates.
  Therefore, I introduced an amendment in May of last year that would 
have guaranteed GAO the authority to audit all of the extraordinary 
emergency assistance from the Federal Reserve. Regrettably, due to 
objections from the Federal Reserve, my amendment had to be watered-
down to ensure that GAO received at least some of the additional 
authorities it needed.
  Although I would have preferred to make all of the Fed's emergency 
actions under section 13(3) subject to GAO audit, I agreed to limit my 
amendment to Fed actions aimed at specific companies like Bear Stearns 
and AIG. However, broader, more comprehensive oversight authority over 
the Federal Reserve is needed to ensure the kind of transparency and 
accountability the American people expect. Unfortunately, when the 
opportunity to embrace that sort of oversight was presented, the 
Federal Reserve hid behind concerns about the independence of monetary 
policy to maintain the secrecy of its operations.
  Another example of the Federal Reserve resisting attempts to shine 
light on their actions surrounds the ``back-door bailout'' of Goldman 
Sachs and major foreign banks through the aid to AIG. The Federal 
Reserve initially refused to disclose the identity of the banks to whom 
AIG paid out the vast majority of its Federal assistance. Federal 
Reserve lawyers even opposed AIG disclosing details of its transactions 
in public filings required by the Securities and Exchange Commission. 
The Federal Reserve argued that disclosing the identity of these 
counterparties who engaged in exotic, risky transactions with AIG would 
destabilize AIG, would harm the private business interests of the 
counterparties, and could affect the stability of the markets as a 
whole. However, following significant public and Congressional 
pressure, the identities of the counterparties were released, and we 
learned that French bank Society General and Goldman Sachs were among 
the largest beneficiaries of the Federal bailout of AIG. None of the 
horrible consequences the Federal Reserve used to oppose basic 
transparency came to pass. The sky did not fall.
  The Special Inspector General for TARP has launched an investigation 
into whether there was misconduct at the Federal Reserve in regard to 
the Fed's role in the failure of AIG to disclose billions of dollars in 
counterparty payments to the SEC last year. And just this week, the 
Special Inspector General announced that it is investigating the 
Federal Reserve for withholding documents from the Special Inspector 
General in connection with his audit in November 2009 of the AIG 
counterparty payments. The Special Inspector General learned that they 
did not receive all of the documents they requested from the Federal 
Reserve when they saw the documents produced last week under subpoena 
to the House Committee on Oversight and Government Reform for the 
Committee's January 27, 2010, hearing. This sort of stonewalling by the 
Federal Reserve is outrageous and cannot be tolerated.
  So, I have had to ask myself, Is Ben Bernanke the man to lead us 
forward?
  Chairman Bernanke didn't see the financial crisis coming. He never 
expected our unemployment to reach 10 percent. He didn't foresee the 
subprime housing market affecting the broader economy. He didn't expect 
complicated financial instruments like credit default swaps to pose a 
risk to the economy, even though they were considered by some to be 
``financial weapons of mass destruction.'' In fact, Chairman Bernanke 
insisted only well-informed and intelligent minds were using such 
instruments and that government supervision wasn't necessary.
  This lack of foresight makes me wonder if he is ready to lead our 
economy down the path to a sustainable recovery.
  I am afraid Ben Bernanke thinks everything is under control. He 
steered our economy out of danger. But we still have a long road ahead 
of us. The Fed has to unwind its massive balance sheet. It has to 
remove the excess funds that were created to paper-over the financial 
sectors' unacknowledged losses without stoking the flames of inflation.
  We need a Fed Chairman that is committed to a strong dollar and low 
inflation. We need a Fed Chairman that is committed to transparency.
  I am afraid Ben Bernanke had a seat at the table during the 
development of our current economic and financial crisis. He has failed 
to learn its lessons. He has promoted a policy of easy money, inflating 
our way from a stock market bubble to a housing bubble. He neither 
predicted nor prepared for the inevitable results. Moreover, he seems 
determined to repeat the mistakes of the past.
  For these reasons, I cannot support his nomination by President Obama 
to serve a second term as Chairman of the Fed.
  Mr. CORNYN. Mr. President, I would like to explain why I will vote 
against the confirmation of Ben Bernanke for a second term as Chairman 
of the Federal Reserve. Ben Bernanke is a brilliant and honorable man. 
He deserves our Nation's thanks for his years of public service--
especially during the greatest financial crisis in decades. I agree 
with Chairman Bernanke's supporters that some of his actions mitigated 
that crisis--and that we might be in a much worse place today if not 
for his leadership. Nevertheless, I believe the Federal Reserve needs a 
fresh start--with a new Chairman--for several important reasons.
  First, Chairman Bernanke was a member of the Fed's Board of Governors 
where he strongly supported Chairman Greenspan's monetary policy that 
kept interest rates very low. In fact, the Federal funds target rate 
reached a low of 1 percent by mid-2003. Most economists agree that 
these low interest rates were one of the factors--certainly not the 
only factor--that contributed to the housing price bubble that expanded 
for much of the previous decade. And when the housing bubble burst, our 
global financial crisis began. This isn't ancient history. Earlier this 
month, Chairman Bernanke delivered a remarkable speech to the American 
Economic Association in Atlanta. In that speech he defended the Fed's 
actions before the crisis--and largely absolved himself of any 
responsibility for it. Now I am willing to support a person who makes 
tough decisions--and learns from them when things don't go well. But 
under Chairman Bernanke, the Federal Reserve missed the signals that 
the economy was in trouble--such as the housing bubble, and unsettled 
credit markets. The Fed missed the chance to take action sooner--action 
that might have prevented the necessity of its massive intervention 
later on. And today, Chairman Bernanke still does not recognize the 
missed opportunities that occurred on his watch.
  Second, Chairman Bernanke played a role in the passage of the 
Troubled

[[Page 849]]

Asset Relief Program--or TARP. It is important to remember what 
Chairman Bernanke and Treasury Secretary Hank Paulson were telling us 
before we all voted on TARP in October 2008. In public, their testimony 
was alarming. On September 23, 2008, Secretary Paulson said that 
Congress must act ``in order to avoid a continuing series of financial 
institution failures and frozen credit markets that threaten . . . the 
very health of our economy.'' Chairman Bernanke was one of those who 
told us--in effect--that we were perhaps days away from a complete 
meltdown of our financial system. So a lot of us did our patriotic 
duty. We trusted the experts and we authorized the TARP program. And 
almost immediately after we did so, the Treasury changed what they said 
they were going to do with the money. Only weeks after TARP was 
enacted, the Bush administration abandoned the goal of purchasing 
``toxic assets.'' Instead, they funneled billions of taxpayer dollars 
directly to many of the Nation's largest financial institutions. Soon 
the Federal Government was acquiring ownership stakes in banks, 
financial institutions and automakers--with the full support of the 
incoming Obama administration. In fact, the Obama administration has 
gone even further, using its TARP leverage to set executive pay at 
several companies. And during the reorganization of General Motors, the 
Obama administration used its leverage to benefit its union allies--
over the rights of secured bondholders who had loaned their savings to 
the company. TARP may have also enabled public corruption and criminal 
activity. According to the latest report from TARP's inspector general 
Neil Barofsky, there are 54 ongoing criminal and civil investigations 
into TARP related activities. These activities include: ``complex 
issues concerning suspected TARP fraud, accounting fraud, securities 
fraud, insider trading, bank fraud, mortgage fraud, mortgage servicer 
misconduct, fraudulent advance-fee schemes, public corruption, false 
statements, obstruction of justice, money laundering, and tax-related 
investigations.'' President Obama and the Senate leadership have 
resisted our attempts to end the TARP program. Last week, 45 Democrats 
voted down Senator Thune's amendment which needed a 60-vote threshold 
to end the TARP program. And last night, President Obama proposed using 
TARP to fund his new stimulus bill--in order to get around his own 3-
year spending freeze. By the way, using TARP on new spending would also 
break the promise that the President made when he voted for TARP in 
this very Chamber. Then-Senator Obama said:

       [I]f American taxpayers are financing this solution, then 
     they have to be treated like investors. They should get every 
     penny of their tax dollars back once the economy recovers.

  Mr. President, TARP is a government credit card that should be 
cancelled. And Chairman Bernanke was one of the key enablers that led 
to its creation in the first place.
  Third, I believe we need a Fed Chairman who demonstrates a greater 
commitment to transparency. The Federal Reserve has been very resistant 
to giving the Government Accountability Office, GAO, independent audit 
authority. In fact, the GAO told the Senate Finance Committee last year 
that the Federal Reserve was resisting its investigation efforts in 
reviewing the response to the financial crisis by claiming that it 
would impair the independent nature of monetary policy. I agree that 
politics should not be involved in monetary policy. Yet since the 
beginning of the financial crisis, the Federal Reserve has routinely 
exercised unprecedented, emergency powers that resulted in a $3.4 
trillion expansion of its balance sheet according to some estimates. 
This is risk that will be borne by the American taxpayer and they 
deserve to know what their government is doing. Another example of the 
Federal Reserve resisting transparency surrounds the assistance 
provided to AIG. The Federal Reserve initially refused to disclose the 
identity of the banks to whom AIG paid out the vast majority of its 
Federal assistance. They even opposed AIG disclosing details of its 
transactions in public filings required by the Securities and Exchange 
Commission. The Federal Reserve argued that disclosing the identity of 
these counterparties who engaged in exotic, risky transactions with AIG 
would destabilize AIG, would harm the counterparties, and could 
destabilize the market as a whole. However, following significant 
public and congressional pressure, the identities of the counterparties 
were finally released and the market moved forward. The inspector 
general for TARP is now investigating into whether there was misconduct 
at the Federal Reserve in regard to its role in the failure of AIG to 
disclose billions of dollars in counterparty payments to the SEC last 
year. And just yesterday at a hearing by the House Committee on 
Oversight and Government Reform, the TARP inspector general announced 
that additional documents and facts have come to light that have caused 
them to initiate an investigation to review the extent of the Federal 
Reserve's cooperation during the course of its audit of the AIG 
counterparty payments. Clearly, the Fed needs more transparency, not 
less. That is why I am a cosponsor of the Federal Reserve Sunshine Act 
of 2009. This bill would require the GAO to conduct a comprehensive 
audit of the Federal Reserve System and its banks and report back to 
Congress by the end of 2010. But in addition to an audit, the Fed 
clearly needs a new Chairman--one more clearly committed to 
transparency and accountability.
  Supporters of Mr. Bernanke argue that to vote against him will 
politicize the Federal Reserve. I could not disagree more. An up-or-
down vote is part of our responsibility as Senators to provide our 
advice and consent. Some supporters also argue that we could wind up 
with someone worse than Mr. Bernanke--and that any transition would 
unsettle financial markets. On this point, I would contend that the 
current uncertainty job-creators face today is due to the policies 
being pushed by this administration; this is the main obstacle to 
building confidence and growing jobs for Americans. But again, the 
Senate will have the opportunity to provide its advice and consent to 
any future nominee. And if Chairman Bernanke's term expires, Vice 
Chairman Donald Kohn would immediately assume his duties. And Mr. 
Bernanke would still remain on the Fed's Board of Governors. So the 
supposed ``transaction costs'' of voting down this nomination are 
overstated, in my opinion. The simple truth is: No one person is 
indispensible in any public office. I believe the American people and 
our financial system will be better served by new leadership at the 
Fed. And therefore I will vote against this nomination.
  Mr. SPECTER. Mr. President, I have decided to oppose the renomination 
of Chairman Ben Bernanke. I do so with reluctance because I admire his 
record of academic and professional achievements.
  My sense of admiration and the fact that I like him has to be weighed 
in the broad context of his work as Chairman and what the American 
people have a right to expect on results and accountability. The 
Federal Reserve is given great authority and commensurate 
responsibility on regulation and oversight of our financial 
institutions. Accountability frequently is hard to pinpoint; but it can 
be established in the upheaval of the financial institutions in the 
past months and years. The consequences of foreclosures ousting 
thousands from their homes, millions of job losses and billions of 
losses in pension accounts weigh heavily on those responsible for 
regulation and oversight of U.S. financial institutions. These problems 
are traceable in large part to the national housing boom bubble.
  The October 27, 2005, edition of the Washington Post reported 
Chairman Bernanke's testimony that he was not concerned that the 
national housing boom was a bubble that was about to burst. In 
testimony before Congress's Joint Economic Committee, he testified that 
the rise in U.S. house prices by nearly 25 percent over the past 2 
years largely reflected strong economic fundamentals such as growth in 
job incomes and the number of new houses. He did not agree with the 
judgment of

[[Page 850]]

many economists that house prices had risen too far too fast in many 
markets, forming a bubble that could rapidly collapse and trigger an 
economic downturn.
  The Washington Post December 21, 2009, edition reported the following 
:

       In January 2005, National City's chief economist had 
     delivered a prescient warning to the Fed's board of 
     governors: An increasingly overvalued housing market posed a 
     threat to the broader economy, not to mention his own bank 
     and others deeply involved in writing mortgages. The message 
     wasn't well received. One board member expressed particular 
     skepticism--Ben Bernanke. ``Where do you think it will be the 
     worst?'' Bernanke asked, according to people who attended the 
     meeting, one in a series of sessions the Fed holds with 
     economists. ``I would have to say California,'' said the 
     economist, Richard Dekaser. ``They have been saying that 
     about California since I bought my first house in 1979,'' 
     Bernanke replied. This time the warnings were correct, and 
     the collapse of the California real estate market would bring 
     down the nation's fourth-largest bank, the largest casualty 
     of the financial crisis.

  My opposition to Chairman Bernanke is also based on his role, along 
with then-Secretary of the Treasury Henry Paulson, in pressuring 
Kenneth L. Lewis, CEO of Bank of America, to have the Bank of America 
complete its acquisition of Merrill Lynch despite the discovery of 
Merrill's losses without disclosing Merrill's financial problems to its 
shareholders prior to a proxy vote to approve the deal.
  Chairman Bernanke has also not won the public's confidence with 
respect to the Fed's commitment to job creation. No issue is more 
important in America today than job creation. The Fed Chairman must 
explicitly target the full arsenal of the Fed at this pressing 
priority.
  I have considered the concerns that Chairman Bernanke's rejection 
would cause turmoil in the markets. While I regret opposing the 
President on this nomination, I believe that he will fill the position 
with a capable replacement who will command wide respect. I also 
believe that his replacement and others with similar responsibility 
will perform better with this insistence on success and accountability.
  Mr. FEINGOLD. Mr. President, I have given substantial deference to 
executive branch nominations made by Presidents of both parties. That 
deference is greatest when the nomination is for a position closest to 
the President, such as a position in the Cabinet, and at its lowest for 
positions with greater independence and distance from the President.
  The position to which Benjamin Bernanke has been nominated, namely to 
serve another term as Chair of the Federal Reserve Board of Governors, 
is among those for which appropriate deference is lower. The Federal 
Reserve is famously independent.
  A chief responsibility of the Chairman of the Federal Reserve is to 
ensure a sound financial system. Under the watch of Ben Bernanke, the 
Federal Reserve permitted grossly irresponsible financial activities 
that led to the worst financial crisis since the Great Depression.
  While Chairman Bernanke has certainly been instrumental in helping 
the financial system recover from that crisis, we should not forget his 
role in its creation. Under Chairman Bernanke's watch predatory 
mortgage lending flourished, and too big to fail financial giants were 
permitted to engage in activities that put our nation's economy at 
risk. And as it responds to the crisis it helped to usher in, the 
Federal Reserve under Chairman Bernanke's leadership continues to 
resist appropriate efforts to review that response, how taxpayers' 
money was being used, and whether it acted appropriately.
  For those reasons, I will vote against another term for Chairman 
Bernanke.
  Mr. LEAHY. Mr. President, I will vote for President Obama's 
nomination of Benjamin Bernanke for a second term as Chairman of the 
Federal Reserve Board.
  Chairman Bernanke's nomination should be examined through the prism 
of how he performed during the recent financial crisis, and with full 
consideration of the best interests of the American people and their 
stake in the Nation's economic recovery.
  It is clear that prompt and decisive action by Federal officials like 
Dr. Bernanke saved the country from another Great Depression. Since the 
economic meltdown in the fall of 2008, the Federal government has 
committed its resources to quell the financial turmoil and stabilize 
the economy. The Federal Reserve, led by Chairman Bernanke, played a 
central role in these efforts. They cut interest rates early and 
aggressively, reducing the target for the Federal funds rate to nearly 
zero. They created targeted lending programs to restart the flow of 
credit in critical markets. They worked with other agencies--like the 
Treasury Department, the FDIC, and overseas central banks--to ensure 
that financial institutions worldwide had access to short-term funding.
  I supported these efforts to respond to the financial crisis to 
prevent the country from sliding into an economic depression, which was 
a very real possibility just a few months ago. Congress passed an 
economic rescue bill that staved off a full market retreat, and it 
enacted an economic recovery plan that is beginning to turn things 
around. Through these efforts our economy has begun to show signs of 
progress in recent months.
  But much more is needed to jump-start our economy, and the Federal 
Reserve needs to focus more on helping Main Street, not just Wall 
Street. While I believe Chairman Bernanke acted wisely during the worst 
of the economic crisis, he now needs to concentrate his efforts on a 
broader economic recovery by helping small businesses gain access to 
affordable capital to expand their markets and create more jobs. Small 
businesses are the backbone of Vermont's and the Nation's economy. 
During his second term, Chairman Bernanke must direct the Federal 
Reserve to do more to support small business economic growth.
  And with the Federal Reserve playing such a large role in the 
recovery effort, the American people deserve greater transparency by 
knowing the full extent of the Fed's lending programs, which is why I 
have cosponsored legislation introduced by Senator Sanders to provide 
for a full audit of the funds released by the Federal Reserve.
  The early stages of an economic recovery are fragile--all the more 
during this recovery, as we inch back from a time, unprecedented in our 
lifetimes, when the United States and the world stood on the brink of 
financial collapse in the fall of 2008. Economic decisions and markets 
and ultimately our economy itself are unsettled by uncertainty, and the 
intended or unintended effects that a sudden turnover at the Federal 
Reserve would have right now on the economic recovery should not and 
must not be underestimated.
  When considering who would best fill important positions like 
Chairman of the Federal Reserve, the President and the Senate must 
ensure that Federal agencies are led by qualified and competent 
officials. Chairman Bernanke has helped to steer our financial and 
economic system through the worst financial storm in nearly a century. 
With much work remaining, I support his nomination for another term.
  Mrs. FEINSTEIN. Mr. President, I rise today to speak in support of 
the reconfirmation of Ben Bernanke as Chairman of the Federal Reserve.
  Mr. Bernanke has been a steady hand at the Federal Reserve during the 
worst financial crisis since the Great Depression. Mr. Bernanke knows 
something about that: his scholarly work as an economics professor at 
Princeton University focused on the Great Depression. At a time when 
our economy is climbing out of a deep recession, I believe Mr. 
Bernanke's continued leadership will provide the stability that is 
essential to economic recovery.
  Some blame Mr. Bernanke for the financial crisis and its severity. 
They believe President Obama must set an example and break with the 
past by replacing him.
  I do not agree.
  It would be a big mistake, in my view, to jettison a man whose 
expertise and experience have been crucial to rescuing our economy, and 
I believe President Obama made the right decision to keep Mr. Bernanke 
at the Fed.
  In my opinion, he should be reconfirmed without delay, because his 
term

[[Page 851]]

expires in 3 days. Failure to do so would send the wrong message to 
both the American people and global financial markets, at a time of 
continued economic uncertainty. It could roll back some significant 
progress in restoring market confidence. For instance, under Chairman 
Bernanke's leadership, the Dow Industrial Average rebounded 
significantly from a 12-year low of 6,547 on March 9, 2009 and reached 
a high on January 19th when it closed at 10,725. This represents a gain 
of 4,178 points or nearly 64 percent over the course of 10 months. The 
S&P 500 has risen about 70 percent since the low in March and also 
reached its recent high on January 19, closing at 1,150.23. Retirement 
accounts were valued at $8.6 trillion in the third quarter of 2007. But 
following the market's bottoming out in March of 2009, retirement 
accounts had lost $2.8 trillion--33 percent--of their peak value, 
according to Retirement Savings statistics from the Urban Institute in 
a January 2010 report. Since then, retirement account balances have 
rebounded sharply. Accounts have gained roughly $1.3 trillion--23 
percent--ending the third quarter at around $7.1 trillion. Although 
assets remain 17 percent below their peak, they are still above their 
2005 value and near their 2006 value.
  So we have clearly made some progress and there are positive signs, 
but we still have a long way to go. Simply put, the gains on Wall 
Street have not been felt by Main Street: The national unemployment 
rate is 10 percent, with 15 million Americans out of work; Small 
businesses are struggling, and many are going under. In my State, small 
business bankruptcies increased by 81 percent last year alone, and 
commercial corridors once teeming with business are now plagued by 
vacancies; consumer demand remains low as American workers struggle in 
these tough times; and, retirement accounts are still down roughly $1.5 
trillion from their peak.
  These are terrible statistics, and there is much more work to be done 
to increase our national prosperity.
  But last week, uncertainty caused by news that Mr. Bernanke's 
reconfirmation was threatened in the Senate caused the Dow Jones to 
fall by 552 points, with a 216-point drop on Friday alone.
  The point is clear: the situation is very volatile. President Obama 
has clearly indicated that he believes Mr. Bernanke is the man for the 
job, and I also believe this is the case.
  Let me tell you why.
  First, Mr. Bernanke is an expert on the Great Depression, a scholar 
who understands the causes of, and remedies for, dramatic economic 
downturns like the one we experienced last year. There is no one better 
qualified to be at the helm of the Fed at this time, and he is 
dedicated to fulfilling its mission to restore prosperity, create jobs 
and keep prices stable.
  Second, Mr. Bernanke played a key role in averting a much greater 
financial crisis.
  He took critical steps to stop the economic freefall and restore 
stability. He aggressively cut interest rates early on, reducing the 
target Federal funds rate to nearly zero. It has remained at this level 
since December 2008.
  Under his leadership, the Fed played a central role in quelling last 
year's financial turmoil. It launched joint efforts with other agencies 
and foreign authorities to avert a collapse of the global banking 
system. It ensured financial institutions adequate access to short-term 
funding when private funding resources dried up.
  It led the ``stress tests'' on large U.S. banks to ensure that these 
institutions had adequate capital and consumers would be confident that 
their bank deposits were safe.
  The Fed, under Mr. Bernanke's leadership, also created targeted 
lending programs that helped ease the flow of credit to many 
businesses.
  For example, the Term Asset-Backed Securities Loan Facility has 
financed more than 3.4 million home loans, more than 100 million credit 
card accounts, 480,000 loans to small businesses and 100,000 loans to 
large businesses.
  We are starting to see the positive results of these bold moves.
  There are undoubtedly legitimate critiques of Mr. Bernanke. I agree 
that more transparency is needed at the Federal Reserve. And, I would 
have liked to see more action taken to curb the abusive lending 
practices which have led to literally millions of foreclosures in my 
home State of California.
  Many gaps in regulation and oversight of our financial system still 
remain.
  The administration just proposed the Volcker rules which I believe 
would succeed in ending the rampant speculation and excessive size of 
``too big to fail'' institutions that led us to where we are today.
  Congress must act swiftly to regulate the financial sector more 
prudently, and expand authority for the Fed, the Commodity Futures 
Trading Commission, and the Securities and Exchange Commission.
  We must intelligently close these gaps in regulation, not risk an 
economic backslide by taking out our collective frustrations on Mr. 
Bernanke.
  Everyone is flawed, and there is more than enough blame to go around. 
But we must also give credit where it is due, and Mr. Bernanke 
successfully helped to pull this nation back from the brink.
  His academic expertise on the Great Depression, coupled with his 
experience in facing down the greatest economic turbulence since the 
1930s, makes him an unparalleled choice for leadership at the Fed right 
now.
  USA Today, in an editorial published yesterday, gave a forceful 
defense of Mr. Bernanke's reconfirmation. I want to quote from it here, 
because I think it gives a very clear assessment of the situation:

       The question facing the nation is, who do you want in 
     charge of this delicate task? Someone who has intimate 
     knowledge of what needs to be done, has learned from past 
     mistakes and has the confidence of the financial markets? Or 
     someone new who, in order to win congressional confirmation, 
     will be hamstrung by promises not to take difficult-but-
     necessary steps, such as bumping up interest rates to keep 
     inflation in check?
       Bernanke deserves considerable credit for helping stave off 
     economic collapse. For that reason, he also deserves another 
     term as chairman.

  Mr. President, I couldn't agree more.
  Mr. Bernanke deserves a chance to finish the enormous and historic 
task at hand. He has done well thus far, and I intend to support him 
for a second term as Chairman of the Fed.
  Ms. MIKULSKI. Mr. President, people are angry and they are anxious. 
They are worried their middle class way of life is slipping by. They 
are worried about their jobs. They are worried about their pensions. 
They are worried about the cost of everything from health care to 
housing to higher education. They have to make tough decisions. They 
are sitting at their kitchen tables balancing their checkbooks and 
being careful about spending. They want to know we are being careful 
too. They want an administration and a Congress that do two things: 
create jobs and spend money frugally and wisely.
  I am angry too. I was told that TARP was needed to get money to Main 
Street. I didn't care if every firm on Wall Street went bankrupt. But I 
did care about jobs, small businesses, and families' mortgages. That's 
what I was told TARP was about. Instead--ungrateful bankers got an 
astonishing amount of money from taxpayers who used it to pay 
themselves bonuses.
  Chairman Bernanke made four big mistakes: he let banks take on too 
many risks, he ignored the housing bubble, he failed to protect 
homeowners, and he gave too much taxpayer money away for too little in 
return. It is not just Mr. Bernanke though. The entire economic policy 
team for the last two administrations deserves blame
  So I had questions about this nomination. I spoke with Maryland 
business leaders, looked into Mr. Bernanke's record, and I met with him 
at the end of last year.
  I let Mr. Bernanke know that I am focused on three things to get our 
economy going again: creating jobs, getting more lending to the middle 
economy and small businesses, and helping people get out from under the 
threat of foreclosure.

[[Page 852]]

  I know that people's top priority is jobs. Mr. Bernanke needs to 
realize that too. When Bernanke thought Wall Street was on the verge of 
a crisis, he acted dramatically. He used new powers for new programs. 
Well, the job market is in a crisis now. But the Fed's response has 
just been tame and tepid. We need the same urgency from Mr. Bernanke to 
jump-start the job market as he gave to Wall Street to jump-start the 
financial markets.
  The Fed has pumped trillions of dollars into the financial system. 
Congress has approved billions more. Money went to the banks and 
because we thought they'd lend it out to help small businesses and help 
community banks, and community pillars. But what I have heard since 
then is that companies' credit is being withdrawn and responsible 
applicants are being rejected for reasonable loans. We need to try 
something different to make sure money goes where we want it to--and 
doesn't get used by banks to pay bonuses.
  I am also angry that economic policy-makers went all out to help Wall 
Street and only halfway to help homeowners. In his second term Mr. 
Bernanke needs to do much more to help them, and help communities 
ravaged by too many foreclosures.
  Mr. Bernanke needs to realize that ``Crisis Averted'' doesn't mean 
``Mission Accomplished.'' There have been too many missed signals--
misplaced priorities. But I am voting to confirm Mr. Bernanke because 
he is not a man of ideology and when we needed him most his expertise 
and level head probably helped stop a catastrophe. He didn't panic, and 
learned from history, which he has studied closer than anyone else. No 
one understands the risks the economy faces better than he does. That 
does not mean we shouldn't rock the boat. We need bold new approaches--
and I'll fight for them.
  I was advised that rejecting his nomination would cause markets to 
nose-dive--which would hurt retirees and families saving for their 
future. I am not enthusiastic in my support. But I think Mr. Bernanke 
understands the job that he still has to do. And that in his second 
term he will focus better on jobs, getting lending going to the middle 
economy, and mortgages. So I will vote to confirm him for a second 
term.
  The PRESIDING OFFICER. Who yields time?
  Mr. DODD. Mr. President, I believe there are some Members who are 
coming. Absent someone walking in the door, I suggest the absence of a 
quorum and ask unanimous consent that the time be equally allocated to 
both sides.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mrs. BOXER. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. BOXER. Mr. President, I ask unanimous consent that I be yielded 
5 minutes of time off the Democrats' time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. BOXER. Mr. President, I rise today to explain why I will not 
support the nomination of Ben Bernanke for another term as Chairman of 
the Federal Reserve. But I also want to make it clear that I do not 
support a filibuster, because I believe he deserves to have a vote on 
his nomination.
  I have not met anyone who doubts that Chairman Bernanke is very 
bright, he is very dedicated, he is very conscientious, he is an expert 
on the depression era. I am grateful for the work he did in those 
critical weeks when the American system teetered on the verge of 
collapse; that is, our economic system.
  But I do think this is a moment to take stock, in many ways as 
President Obama did in his State of the Union Address: How did we get 
to this very difficult economic place? I think as we look at that, 
people have to be held accountable for their actions along the way. 
That means Chairman Bernanke must be held accountable for his record.
  I asked my staff, could you get me the Charter of the Federal 
Reserve, because I know it has many objectives that it needs to 
fulfill. Here are the four main objectives to the Federal Reserve:
  One, conducting the Nation's monetary policy in pursuit of maximum 
employment and stable prices.
  Two, regulating the banking system to ensure the safety of the 
Nation's financial system, and protecting the credit rights of 
consumers.
  Three, maintaining the stability of the financial system and 
containing systemic risk that might arise in the financial markets.
  Those are three out of the four responsibilities we have to take a 
closer look at. I look at those three responsibilities, and, frankly, I 
don't see how the Fed met those responsibilities--remember, maximum 
employment, safety of the Nation's financial system, protecting the 
credit rights of consumers, maintaining the stability of the financial 
system, and containing systemic risk that may arise in financial 
markets.
  Put on top of that the fact that in the 1990s, Congress gave the Fed 
the very important responsibility of overseeing the housing market to 
stop predatory lending. That was an added specific responsibility. I 
have to say that I think Chairman Bernanke vastly underestimated the 
dangers of the housing bubble and unconstrained subprime lending.
  This is what he said in May of 2007:

       We believe the effect of the troubles in the subprime 
     sector on the broader housing market will likely be limited, 
     and we do not expect significant spillovers from the subprime 
     market to the rest of the economy . . . The vast majority of 
     mortgages, including subprime mortgages, continue to perform 
     well.

  That was Mr. Bernanke in May 2007. That is hard for me to look at and 
say that we should vote to confirm him. He failed to spot the dangerous 
banking practices, in addition to the mortgage practices that led to 
the crisis.
  In February 2008, 7 months before the greatest financial collapse in 
80 years, he said:

       Among the largest banks, the capital ratios remain good, 
     and I do not anticipate serious problems . . . among the 
     large internationally active banks.

  So until the crisis occurred, Chairman Bernanke was a major advocate 
for even more permissive banking regulation.
  Now we see unemployment at 10 percent nationally and in my State a 
horrific 12-plus percent.
  The American people have the right to ask whether the Fed is truly 
committed to supporting Main Street's economy, not just Wall Street. 
That is why I cannot support his reappointment. He sat by when 
President Bush put all the policies into place that led us to this 
crisis. He was George Bush's choice. He sat there and said everything 
was fine, everything was wonderful, everything was good, housing was 
OK.
  If Mr. Bernanke is confirmed--and I expect he will be--I hope he will 
listen to what a lot of us are saying and turn his full attention to 
Main Street, to the people who need his support. People out there need 
the wind at their backs. They need somebody who understands what they 
are facing in terms of their housing problems, their unemployment 
problems. Let's get this economy back on track.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from South Carolina is recognized.
  Mr. DeMINT. Mr. President, it is not often that I agree with the 
Senator from California, but I certainly appreciate her perspective on 
this issue. A number of us from a broad spectrum in both parties are 
concerned about this nomination.
  I rise to oppose the nomination of Ben Bernanke as Federal Reserve 
chairman. It is important that we look at this not just as a single 
nomination but as part of a much bigger picture we need to recognize. 
The confirmation of Ben Bernanke is a confirmation of policies that 
brought our economy down. If we ignore that, we are going to continue 
these same policies and condemn ourselves, our country, and our fellow 
Americans to high unemployment and much less prosperity in the future.
  It is never fair to blame any one person for major problems such as 
we have

[[Page 853]]

in this country. But it is important, when we have this kind of 
problem, where millions of Americans have lost in total trillions of 
dollars and jobs have been lost and families have suffered greatly, 
that we recognize the difference between the problems we are looking at 
today and the real causes of those problems, what we call in business 
``the root cause'' of problems. We learn, when we do strategic 
planning--and I did this for years for companies--that if you go in and 
look at the problems and try to solve them and never go back and 
understand the root causes, all you are doing is fixing symptoms which 
never get fixed because you did not understand the cause of the 
problems.
  Today, we do have a difficult economic situation with high 
unemployment. We have debt at levels that everyone agrees is 
unsustainable. Countries all over the world are beginning to question 
whether we can repay our debts. Some are beginning to question whether 
they should lend us more money to fund our reckless spending.
  Despite what we heard last night about a freeze on spending, everyone 
laughed when we said that starts next year. Today, we voted to raise 
the debt limit another $1.9 trillion. We are going to take that debt to 
over $14 trillion. There is no foreseeable way we can pay that back. 
This is at a time when a large group of Americans called the baby 
boomers are going to retire and the cost of Social Security and 
Medicare is going to skyrocket. These are promises we have to keep to 
seniors because they paid for it, but we have no idea how we will keep 
those promises right now, particularly in light of the current economic 
situation.
  As we look at where we are, we need to recognize how we got here. As 
I have talked to banks, businesses, foreign financial ministers from 
Europe who have come here, everyone agrees there are two major causes 
of the economic problems here and around the world. One is the high 
leverage or the high borrowing that went on because of the loose 
monetary policy at the Federal Reserve. Easy money, cheap money 
encouraged companies and individuals to borrow more than they could 
afford to pay back because it was easy to get and cheap. The big banks 
on Wall Street could more easily borrow money than raise capital. Those 
were incentives created by the policies at the Federal Reserve.
  The second problem is what we are calling toxic assets, which are 
securitized subprime mortgages, were facilitated by Fannie Mae and 
Freddie Mac, two government-sponsored enterprises that reflected the 
political policy of this Congress. It is our responsibility to oversee 
Fannie Mae and Freddie Mac and to make sure they are doing what is 
appropriate for our economy. But what happened is the criteria for 
lending went away. Local mortgage companies could make almost any loan 
they wanted to, to anyone whether they could afford to pay it back, 
using easy money from the Federal Reserve and low criteria for 
forgiving those loans. They sold them all to Fannie Mae. If Fannie Mae 
had not been there to buy these loans, these irresponsible loans would 
not have been made in the first place. But to make matters worse, 
Fannie Mae and Freddie Mac bundled these subprime mortgages up into 
packages we call securities and sold them, sold them to banks as 
assets, sold them all over the world. These are the toxic assets that 
brought down the financial institutions once the housing bubble burst.
  For the President, for Ben Bernanke, for Secretary Geithner to come 
in and indict the free market system and the greed of corporations and 
banks misses the whole point of what caused this problem. Certainly, 
these two causes created perverse incentives for the markets, the banks 
to practice irresponsible behavior. There is no question that went on. 
But to say that was the cause of where we are today misses the point.
  My problem with Ben Bernanke, the President, and Secretary Geithner 
is not that they made mistakes, because Congress certainly made 
mistakes in not overseeing Fannie Mae and Freddie Mac and asking the 
right questions of the Federal Reserve, but the fact that despite the 
evidence being so clear of what really caused the problem, Mr. Bernanke 
still does not recognize those as the causes. In fact, he continues the 
same easy-money policy. He expresses no sense of urgency that we need 
to get the Federal Government out of owning AIG, Fannie Mae, General 
Motors, or Chrysler. When we bring him in for hearings, he seems to be 
more of a command-and-control person than someone who believes in a 
free market system that we need to have good laws and regulations to 
guide. But he and Secretary Geithner and the President indicate that 
they can run this economy, that they can micromanage it.
  To confirm Ben Bernanke is to confirm the continuation of easy-money 
policies, high leverage, as well as the continuation of what Fannie Mae 
and Freddie Mac did to create these toxic assets. We are not asking the 
right questions. I contend that we cannot solve today's problems with 
the same people who created them.
  President Obama last night liked to blame George Bush for the 
problems. Yet he is nominating his people. Secretary Geithner was 
involved with the Federal Reserve and was the architect of these 
bailouts. Ben Bernanke has been here for 4 years and was a key part of 
the bailout, the easy-money policy, and has yet to say that was a 
problem.
  This is more than just another nomination. Everything we work for in 
a material sense rests on the value of our dollar and the monetary 
system. The American economy, the worldwide economy rests on what the 
Federal Reserve does. This is the Federal Reserve that told us subprime 
mortgages would not cause an economic breakdown. Ben Bernanke told us 
Fannie Mae was well capitalized a few months before its collapse. We 
have to depend on the leadership at the Federal Reserve to tell us the 
truth. If our monetary system crashes because of bad policy, everything 
America has worked for, all our material wealth will be gone. This 
country will see a crisis the likes of which it has never seen.
  This body is not taking this nomination seriously enough. We are 
moving ahead quickly, when what we need to do is have a full audit of 
the Federal Reserve, to look at what has been going on, look at their 
involvement with the current crisis, and to make sure they are on the 
right path.
  The Constitution gives the Congress the responsibility to protect our 
monetary system. Years ago, we delegated that to the Federal Reserve, 
but that does not relieve us of our responsibility. To confirm Ben 
Bernanke without even knowing what is going on at the Fed, without 
hearing them say what really caused the problem we have today, is to 
condemn us to the same path that brought us to where we are.
  Voting to confirm Ben Bernanke is a bad decision today. I ask all 
colleagues to reconsider. This is probably the biggest mistake we will 
make in a long time, to continue the same policy we started at the 
Federal Reserve, our monetary system, as well as what we have done here 
in Congress.
  I again encourage my colleagues to reconsider their commitment to 
confirm Ben Bernanke.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DODD. How much time remains?
  The PRESIDING OFFICER. The Senator has 8 minutes 13 seconds.
  Mr. DODD. I yield 5 minutes to my friend and colleague from Vermont. 
He has been very strong on this issue, and I want to give him as much 
time as I can.
  Mr. SANDERS. Mr. President, this is, in fact, an enormously important 
issue. The reality is that all over our country, hard-working, decent 
people have lost their jobs. They have lost homes, their savings. They 
have lost their ability to go to college. We are experiencing the 
highest level of unemployment since the Great Depression. All of this 
did not happen by accident. It happened because of the greed, the 
recklessness, and the illegal behavior of Wall Street, of CEOs there 
who converted our financial institutions into the largest gambling 
casino in the history of the world.
  One of the major functions of the Fed is to protect the safety and 
soundness

[[Page 854]]

of our financial institutions. There can be no debate, Mr. Bernanke, as 
Chairman of the Fed, failed at that important job, and this country and 
the world almost saw a major financial collapse, and we have seen in 
this country a horrendous recession.
  I think average American citizens have a hard time understanding how 
we reward failure, how we say to somebody who was asleep at the switch 
in terms of regulating our financial institutions: Congratulations. You 
failed. There is a major recession. You are getting reappointed. I do 
not think people understand why and how that should happen.
  Second of all, when we talk about the bailout, it is not just the 
$700 billion that went to TARP. There were trillions of dollars in 
zero-interest loans, or almost zero-interest loans, that went to major 
financial institutions. It is incomprehensible to me the Chairman of 
the Fed can lend out trillions of dollars, and when I asked him: Who 
got the money? He said: Sorry, the American people don't have a right 
to know that--in so many words. I am not telling you.
  How can you have confidence in the leadership of the Fed when there 
is virtually no transparency--trillions of dollars being lent out, and 
we do not know who received it? That is not acceptable to me. We need a 
Fed Chairman who believes in transparency, who is going to tell the 
American people who has received those loans.
  We are also today, importantly, not just talking about the past. We 
are talking about the future. We are talking about how we pull this 
country out of a recession in which 17 percent of our people are 
unemployed or underemployed. The fact is, the Fed today has the 
capability, the power to take significant action to protect the middle 
class and working families of this country. I say to the Presiding 
Officer, I do not know about Illinois, but I will tell you, in Vermont 
I get calls every week.
  People are saying: Why did you help bail out these large banks, and 
now they are charging me 25, 30 percent interest rates on my credit 
card?
  Mr. Bernanke and the Fed have the power today to lower interest rates 
on credit cards. I want a Fed Chairman who is going to do that. Last 
night we heard from President Obama, who appropriately pointed out very 
serious problems that small businesses all over this country are having 
in terms of getting the low-interest loans they need in order to create 
the kind of jobs our economy desperately requires. The Chairman of the 
Fed today has the power to provide low-interest loans to small- and 
medium-sized businesses.
  It is not just large financial institutions that can receive zero-
interest or low-interest loans. I know it is a great shock to the Fed, 
but small- and medium-sized businesses--in a productive economy that 
creates real jobs--can also receive those loans. I want a Fed Chairman 
who will provide those loans.
  It is hard to believe the largest financial institutions in this 
country that we bailed out because they were too big to fail--do you 
know what. Three out of four of them are even bigger today. It is time 
to break up those financial institutions that are too big to fail. If 
they are too big to fail, they are too big to exist.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. SANDERS. Mr. President, we need a new direction on Wall Street. 
We need a new Fed Chairman.
  Thank you very much.
  The PRESIDING OFFICER. The Senator from Alabama is recognized.
  Mr. SESSIONS. Mr. President, I, too, would like to share my concerns 
in opposition to Mr. Bernanke's reappointment, and I think my 
colleague, Senator DeMint, summed it up pretty well.
  One of the debates has been, did the Central Bank, which is not a 
free market activity, fail--or did as people say the market fail. I 
agree with him. I do not believe it is exactly correct to say that. The 
Fed dabbles in the market in an attempt to manipulate the market. One 
of the debates has been that Mr. Bernanke allowed the interest rates in 
2002 through 2005 to remain too low, which caused the bubble and which 
caused the burst and put us in this fix.
  The complaint has been that he violated the Taylor rule, which is the 
rule that would advise how interest rates should be set by the Central 
Bank. He made a speech in early January of this year that I think was 
defensive and went to some length to say he did not violate the Taylor 
rule and that low-interest rates did not cause the bubble. So it is one 
thing to make a mistake; it is another thing to make a mistake and 
refuse to acknowledge the mistake.
  I will just say as background, the Wall Street Journal said the 
minutes of the Fed Board meetings prior to his becoming Chairman, when 
he was merely a member of the Board, indicate he was the advocate for 
lower interest rates and actually warned of deflation during this 
period which was wrong.
  Mr. Taylor responded in the Wall Street Journal. I will just quote 
what he said:

       This rule--[the Taylor Rule] calls for central banks to 
     increase interest rates by a certain amount when price 
     inflation rises and to decrease interest rates by a certain 
     amount when the economy goes into a recession. My critique, 
     which I presented at the annual Jackson Hole conference for 
     central bankers in the summer of 2007 is based on the simple 
     observation that the Fed's target for the federal-funds 
     interest rate was well below what the Taylor rule would call 
     for in 2002-2005.

  Mr. Taylor is the author of it. He warned of it in the summer of 
2007. Mr. Bernanke is insisting, just a few weeks before this, that he 
did not violate the rule. A little later, Mr. Taylor goes on to say:

       In his speech [on January 3], Mr. Bernanke's main response 
     to this critique was to propose alternatives to the standard 
     Taylor rule--and then to use the alternatives to 
     rationalize--

  I would say to justify--

       the Fed's policy in 2002-2005.

  Mr. Taylor goes on to say:

       In one alternative, which addresses what he describes as 
     his ``most significant concern regarding the use of the 
     standard Taylor rule,'' he puts the Fed's forecasts of future 
     inflation into the Taylor rule rather than actual measured 
     inflation. Because the Fed's inflation forecasts were lower 
     than current inflation during this period, this alternative 
     obviously gives a lower target interest rate and seems to 
     justify the Fed's decisions at the time.

  So Mr. Bernanke is saying they took his rule and they altered it. 
They did not use as the factor actual interest rates but what they 
predicted interest rates to be, and, of course, their prediction was 
wrong.
  Mr. Taylor goes on to say:

       There are other questionable points. Mr. Bernanke's speech 
     raises doubts about the Taylor rule by showing that another 
     version of the rule would have called for very high interest 
     rates in the first few months of 2008 [after the bubble 
     burst]. But using the standard Taylor rule, with the GDP 
     price index as the measure of inflation, interest rates would 
     not be so high--

  As Mr. Bernanke was suggesting--

       as I testified at the House Financial Services Committee in 
     February 2008.

  That is Mr. Taylor's view.
  Mr. Taylor goes on to say:

       Mr. Bernanke also said that international evidence does not 
     show a statistically significant relationship between policy 
     deviations from the Taylor rule and housing booms.

  Mr. Bernanke is defending himself still. He said international 
studies do not show that our deviation from the Taylor rule had 
anything to do with this mess. But Mr. Taylor responds this way:

       But his speech does not mention that research at the 
     Organization for Economic Cooperation and Development in 
     March 2008 did find a statistically significant relationship.

  Mr. Taylor goes on to say:

       Mr. Bernanke claimed that ``Economists who have 
     investigated the issue have generally found that, based on 
     historical relationships, only a small portion of the 
     increase in house prices earlier this decade can be 
     attributed to the stance of . . . monetary policy.''

  He is talking about the Fed policy, that they did not have anything 
to do with the increase in housing prices. Mr. Taylor calls Mr. 
Bernanke's hand. Mr. Bernanke was not right in that statement. Mr. 
Taylor says this:

       But two of the economists he cites--Frank Smets, director 
     of research at the European Central Bank, and his colleague 
     Marek Jarocinski reported in the July/August issue of the St. 
     Louis Fed Review--


[[Page 855]]


  That is the Federal Reserve publication in St. Louis--
  They found--

     evidence that monetary policy has significant effects on 
     housing investment and house prices and that easy monetary 
     policy designed to stave off perceived risks of deflation in 
     2002-2004 has contributed to the boom in the housing market 
     in 2004 and 2005.

  Mr. Bernanke is saying economists around the world do not agree, and 
that is not accurate. As a matter of fact, they found just the 
opposite. So remember, the Wall Street Journal said he was the easy 
money advocate at the Fed. Mr. Greenspan may have been Chairman, but 
during the early part of the decade, Mr. Bernanke was advocating these 
low interest rate policies; and they were wrong, and they did lead to a 
boom--at least it was a significant factor in the boom, and Mr. 
Bernanke is not acknowledging that. I do not appreciate it.
  I also am very disappointed he supported President Obama's form of a 
stimulus package, saying:

       The incoming administration and the Congress are currently 
     discussing a substantial fiscal package that, if enacted, 
     could provide a significant boost to economic activity.

  However, according to a CNN poll released just yesterday, 74 percent 
of Americans believe at least half of the stimulus package was wasted, 
and 63 percent believe the projects in the plan were included for 
purely political reasons and will have no economic benefit.
  I will just say that this stimulus package--$800 billion, every penny 
of it going to our deficit and increasing our debt--could only be 
justified if it was the most carefully crafted package that created 
jobs, but it was not. I knew it at the time, and so did many others, 
that this was not a jobs-creating package. It was a political package 
put together by the President. It rewarded a lot of his supporters, but 
it was not the kind of jobs package we desperately needed. But Mr. 
Bernanke supported it, and now we have $800 billion added to our debt 
and very little job creation.
  So, Mr. President, I will yield the floor and just conclude by saying 
that I do not think this should be rewarded. I know a lot of people are 
worried that somebody else might be worse. But I have not seen from him 
the kind of gravitas, the kind of stability of leadership, the kind of 
consistent message to the American people about the severe plight we 
are in and about his plan to get us out of it.
  Isn't that what he should be doing? Shouldn't we know what he, 
hopefully working with the President, would do to get us out of this 
mess? I have not seen it and, therefore, I do not believe we have any 
burden of maintaining him. In fact, I think this supports the argument 
that he should not be maintained.
  Mr. President, I thank the Chair and yield the floor.
  The PRESIDING OFFICER (Mr. Merkley). The Senator from Kansas is 
recognized.
  Mr. BROWNBACK. Mr. President, thank you very much.
  I think this is a healthy discussion we are having. We do not usually 
discuss much the Fed Chairman or the appointment or the nomination of a 
Fed Chairman. Yet monetary policy affects all of us in a huge way and 
dramatically affects the world. This is, to me, the sort of debate we 
ought to be having, and I am glad we have some differences of opinion.
  For a long period of time it seemed as if everybody just treated 
monetary policy as something that is in the theoretical world of 
economists and mathematicians and central bankers, and they are the 
only ones who understand the language; they are the only ones affected 
by it; therefore, they are the only ones who ought to discuss it. I am 
not at all suggesting that Congress or the legislative branch ought to 
be setting monetary policy; we shouldn't. But we ought to be discussing 
the people and the principles that are involved and the people we 
appoint to these government positions and this government position, 
which is so critical and so important to all of us in this country and 
around the world.
  So I am delighted we are having a discussion about the Fed Chairman, 
the appointment of the Fed Chairman in this particular case. I think 
Ben Bernanke is a bright gentleman. I have met with him. I have been 
the ranking member on the Joint Economic Committee. I have had him in 
to testify. I find him quite interesting, bright, and a gentleman. 
However, I believe now it is time for us to break this sort of 
Washington-New York corridor that establishes monetary policy and bring 
somebody in from outside that system to start at the Fed and in the Fed 
chairmanship and start looking more toward what Main Street needs in a 
monetary policy rather than what Wall Street needs in a monetary 
policy. I am not opposed to Wall Street, but they have dominated this 
position, people from this Washington-New York corridor, for too long a 
period of time. It too dramatically affects all the rest of us, to 
simply shut out the rest of the philosophy and thought from across the 
country. We need to get to Main Street.
  I also have another concern that is taking place beyond the issue of 
us breaking out of this New York-Washington corridor for the Fed 
Chairman and monetary policy. The second concern I have is I think we 
are headed for a huge government bubble. We have seen the dot-com 
bubble come, burst, and go. We have just gone through--and we are still 
going through--a housing bubble bigger than the dot-com bubble get big 
and blow up. Lots of fiscal and monetary policy to blame in both 
situations. I think we can look back on the housing one and see both 
actions here or lack of actions toward Fannie Mae and Freddie Mac to 
pump up this housing bubble. I think we can see the monetary policy 
pumping up this housing bubble that burst with huge impact; a number of 
people say a near depression type of impact. Now we are heading 
possibly toward the biggest bubble of all, a huge government bubble, 
blown up by the Fed; huge amounts of money being put out in the system 
now to try to prop up, to try to carry us on through this situation. If 
not handled correctly, it could burst in a more profound and difficult 
way than the housing bubble. To me, it is just one of those 
difficulties that is staring us right in the face. Now is the chance 
for us to talk about a different direction, and I think we should do 
that.
  Yesterday, they had a vote of the FOMC, the money supply committee, 
and there was one dissenting vote. That dissenting vote was from Tom 
Hoenig, who is the chairman of the Kansas City Fed. He believes--and he 
is hawkish on the money supply--that we have to start pulling the money 
supply back and out of the system before the inflationary bubble takes 
off. When you put this much money into the system, you are bound to get 
an inflationary bubble and you have to start pulling it back before you 
start feeling it. This is the time we have to start addressing those 
issues.
  I think we ought to look at somebody such as a Tom Hoenig, hawkish on 
the monetary supply, to get us into a stable, long-term position and 
get us ahead of a government bubble bursting on us; also, somebody from 
outside the system, somebody who is more focused on Main Street than 
Wall Street, on monetary policy and monetary supply. Now is the time to 
do it. This is a good chance to debate this. I don't suppose that is 
going to happen here. We are probably going to go ahead with Mr. 
Bernanke, who is a fine man, but now is the time to break out of this 
before this bubble gets bigger, bursts on us, and causes more of a 
problem than what we have even seen with the prior two bubbles. Let's 
get outside of that, and let's deal with that before it is on us.
  I thank my colleagues and I yield the floor.
  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. SHELBY. Mr. President, I know we are getting close to the end of 
the debate, and we will soon be voting on cloture. I wish to take a few 
moments to read a few excerpts from editorials that ran in, of all 
publications, the Wall Street Journal, dealing with Chairman Bernanke, 
his tenure in office, his misdeeds, and so forth. I also ask unanimous 
consent at this time that the full text of the editorials, dated 
January 25, 2010, December 3,

[[Page 856]]

2009, and June 23, 2009, be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

             [From the Wall Street Journal--June 23, 2009]

                        Bernanke at the Creation

       What the Fed Chairman said at the onset of the credit 
     bubble, and the lesson for today.
       The Federal Reserve's Open Market Committee meets today, 
     amid a debate over how and when to remove the flood of 
     liquidity it has poured into the economy in the last 18 
     months. Fed officials say not to worry, they're as vigilant 
     about inflation as ever--which is itself a reason to worry. 
     We've all seen this movie before, when the Fed's failure to 
     act in time gave birth to the housing bubble and credit mania 
     that eventually led to panic and today's recession. Will it 
     make the same mistake now?
       We remember that 2003 debate because it turns out we played 
     a part in it. The Fed recently released the transcripts of 
     its 2003 FOMC meetings, and what a surprise to find a Journal 
     editorial the subject of an insider rebuttal from none other 
     than Ben Bernanke, then a Fed Governor and now Chairman. We 
     had run an editorial on monetary policy on the same day as 
     the Dec. 9, 2003 FOMC meeting, and Mr. Bernanke clearly 
     didn't take well to our warning about ``Speed Demons at the 
     Fed.''
       We reprint nearby both Mr. Bernanke's comments and our 
     editorial from that day. Readers can judge who got the better 
     of the argument, but far more important is what Mr. 
     Bernanke's reasoning tells us about the Fed today. Our guess 
     is that it won't reassure holders of dollar assets.
       * * *
       Recall that by the end of 2003 the economy was well into 
     recovery. Third quarter GDP growth had clocked in at 8.2% 
     (later restated to 7.5%), and growth in all of 2004 would be 
     3.6%. The Bush tax cuts had passed in late May, providing a 
     fiscal boost, and a month later the Fed had cut its fed funds 
     rate to 1% and would hold it there for a year. Yet by 
     December Mr. Bernanke was still giving speeches fretting 
     about ``deflation,'' even as commodity prices were rising and 
     growth was kicking into higher gear. Thus our Dec. 9 warning, 
     the first of many by us and others. 
       Mr. Bernanke's FOMC remarks that day are especially 
     revealing about how he thinks about monetary policy. In 
     particular, he dismisses any link between commodity price 
     increases and future inflation. He cites a study by a Fed 
     economist claiming to find little connection between 
     ``materials'' prices and overall inflation. Yet the price of 
     oil was already rising sharply at the time, and it would keep 
     rising as the Fed maintained negative real interest rates for 
     many more months. This was a bad mistake.
       Rising gas and food prices didn't show up in the Fed's 
     ``core'' inflation measurements, but they sure did wallop 
     U.S. consumers this decade. It's one reason Americans never 
     felt great about the expansion. The soaring price of oil also 
     contributed to the housing bubble by transferring wealth from 
     U.S. consumers to oil exporters such as the Gulf States and 
     Russia, which in turn recycled those petrodollars into U.S. 
     Treasuries and mortgage-backed securities. By ignoring 
     commodity prices, the Fed fueled the housing boom.
       It's also striking how dismissive Mr. Bernanke is of the 
     declining dollar. We'd have thought the greenback's value 
     would be the Fed's paramount concern, given its mandate to 
     keep prices stable. Yet Mr. Bernanke declared that ``large 
     movements of the dollar against major currencies tend to 
     translate into smaller movements against the U.S. trade-
     weighted basket of currencies and into still smaller effects 
     on import prices because of imperfect pass-throughs.'' 
     Translation: Exchange-rate fluctuations aren't the Fed's 
     problem, no matter how disruptive their effect on trade and 
     capital flows.
       Instead of following these actual prices, Mr. Bernanke's 
     main monetary policy guide is something called ``the output 
     gap.'' This is the difference between actual GDP growth and 
     the level of ``potential output,'' or how fast the economy 
     can grow when it's at full capacity. The problem with this 
     guide is that it relies heavily on labor costs and the 
     jobless rate. And because job creation tends to lag economic 
     recovery, these signals tend to flash yellow long after price 
     pressures or asset bubbles have begun to build.
       All of this is relevant today because there is no evidence 
     that Mr. Bernanke and his Fed colleagues have changed their 
     thinking. They still ignore a falling dollar and rising 
     commodity prices, even as oil has climbed to $70 a barrel 
     from $40 six months ago. They also continue to be slaves to 
     the output gap, which means they are unlikely even to begin 
     to tighten as long as the jobless rate remains high. With 
     that rate now at 9.4% and likely to rise, the monetary 
     spigots will probably remain wide open for a long time to 
     come.
       We think the Fed made the right call last fall when it 
     eased dramatically in the heat of the panic. The financial 
     shock had caused a decline in the velocity of money, and the 
     Fed needed to boost the supply of money to prevent a genuine 
     deflation. The recession this time is far deeper than in 
     2001-2002, so there is also a case to be made for erring on 
     the side of being slower to tighten.
       But this time the Fed has also gone to greater easing 
     lengths than it ever has, taking short-rates nearly to zero 
     and making direct purchases of mortgage securities and even 
     Treasuries. These are extraordinary acts that push the Fed 
     deeply into fiscal policy, credit allocation and directly 
     monetizing Treasury debt. Combined with the 2003-2005 
     mistake, they have also raised grave doubts about the Fed's 
     credibility and independence.
       * * *
       Mr. Bernanke will need political courage that we haven't 
     seen since Paul Volcker was Chairman in order to exit from 
     all of these efforts in time to prevent another bubble or 
     broader inflation. It also wouldn't hurt if the Fed chief 
     looks back with some humility on his intellectual certainty, 
     circa 2003, and analyzes why he was so wrong.
                                  ____


              [From the Wall Street Journal--Dec. 3, 2009]

                          The Bernanke Record

       Federal Reserve Chairman Ben Bernanke faces his Senate 
     renomination hearing today, amid signs that the confirmation 
     skids are greased. We nonetheless think someone should say 
     that, as a matter of accountability for the financial crisis 
     and looking at the hard monetary choices to come, the country 
     needs a new Fed chief.
       We say this not because of Mr. Bernanke's performance 
     during the financial panic of 2008, for which he has been 
     widely and often deservedly praised. Like others in the 
     regulatory cockpit at the time, he had to make difficult 
     choices with imperfect information and when the markets were 
     shooting with real bullets.
       He supplied ample liquidity when it was most needed last 
     autumn, and he has certainly been willing to pull out every 
     last page of the central banker playbook. If some of those 
     decisions were mistakes, the conditions the Fed faced were 
     extraordinary. Anyone at the helm would have made calls that 
     in hindsight he'd regret.
       The real problem is Mr. Bernanke's record before the panic, 
     with its troubling implications for a second four years. When 
     George W. Bush nominated the Princeton economist four years 
     ago, we offered the backhanded compliment that at least he'd 
     have to clean up the mess that the Alan Greenspan Fed had 
     made. That mess turned out to be bigger than even we thought, 
     but we also didn't know then how complicit Mr. Bernanke was 
     in Mr. Greenspan's monetary decisions.
       Now we do, thanks to the release of the Federal Open Market 
     Committee transcripts from 2003. They show (see ``Bernanke at 
     the Creation,'' June 23, 2009) that Mr. Bernanke was the 
     intellectual architect of the decision to keep monetary 
     policy exceptionally easy for far too long as the economy 
     grew rapidly from 2003-2005. He imagined a ``deflation'' that 
     never occurred, ignored the asset bubbles in commodities and 
     housing, dismissed concerns about dollar weakness, and in the 
     process stoked the credit mania that led to the financial 
     panic.
       This, too, might be forgivable if Mr. Bernanke had made any 
     attempt in recent months to acknowledge the Fed's role in the 
     mania. Treasury Secretary Tim Geithner, Dallas Fed President 
     Richard Fisher and others have conceded that monetary policy 
     was too loose. How central banks can minimize, if not 
     prevent, asset bubbles without inducing recessions would seem 
     to be a subject for candid Fed debate.
       But Mr. Bernanke and Vice Chairman Don Kohn have formed an 
     intellectual moat around the Fed, blaming the credit bubble 
     on the ``global savings glut'' that they themselves helped to 
     create. They are the Edith Piafs of central banking, 
     regretting nothing.
       All of this bears directly on how the Fed will operate over 
     the next four years. We are now in another period of 
     extraordinary monetary ease. Mr. Bernanke is assuring the 
     world that, this time, he knows how and when to start 
     removing this stimulus, even as he also promises that the Fed 
     will remain easy for months to come. The guideposts the Fed 
     claims to follow on policy--the jobless rate, ``resource 
     utilization''--also remain the same. Price signals, 
     especially the value of the dollar, count for much less in 
     this Fed's decision-making.
       Earlier this decade, the Fed had 20 years of sound-money 
     history as a source of credibility. The world's investors 
     were willing to give the Greenspan Fed the benefit of the 
     doubt--too much doubt as it turned out. But now, after the 
     mania and panic, investors are unlikely to show such 
     forbearance. That's already clear in Asia, where the falling 
     dollar is creating monetary distortions, and investors are 
     bidding up assets and currencies on a bet that the dollar is 
     in for further declines. Sooner rather than later, Mr. 
     Bernanke will have to tighten money even if the U.S. jobless 
     rate remains higher than everyone would like.
       The Fed chairman has shown he knows how to ease money, and 
     creatively so. But that is the easy part of his job. The hard 
     part, the time when central bankers earn their fame, is when 
     they have to take the money away. We see little in the 
     chairman's policy history or guideposts to suggest he will be 
     willing to endure the criticism that

[[Page 857]]

     will come with tightening money amid a lackluster recovery, 
     if that is what is required to protect the dollar or prevent 
     an inflation outbreak.
       The political irony today is that even as Mr. Bernanke is 
     cruising toward confirmation, the Fed as an institution is 
     under its most sustained political attack in two generations. 
     The political class is especially riled about the Fed's 
     forays into fiscal policy. While that is understandable given 
     the last year, the response to this action should not be to 
     put the Fed under even greater political control from 
     Congress. That is the Argentinian solution.
       The better response is to hold policy makers accountable 
     for their actions, including chairmen of the Federal Reserve. 
     At this monetary moment more than any since the late 1970s, 
     the Fed needs a hard-money chairman with the courage and 
     credibility to resist the temptation to escape from the 
     consequences of the last bubble by floating another one.
                                  ____


          [From Wall Street Journal Editorial, Jan. 25, 2010]

                        The Bernanke Nomination

       The politicians turn on a political central banker.
       The White House said yesterday it has damped down a 
     political revolt against Ben Bernanke and now has the votes 
     to secure the Federal Reserve Chairman's second four-year 
     term. Whether or not Mr. Bernanke is confirmed, the lesson we 
     draw is that overly political central bankers will eventually 
     be undone by politics.
       There's no doubt that some of this reconfirmation panic is 
     nothing but political opportunism. When we opposed Mr. 
     Bernanke's reconfirmation on December 3, the facile consensus 
     was that the Fed chief was a master of the universe who had 
     saved the world from depression. But after Scott Brown's 
     victory in Massachusetts last week, Senate Democrats are 
     suddenly looking for a financial political sacrifice. 
     President Obama doesn't look ready to throw over Treasury 
     Secretary Tim Geithner, so Mr. Bernanke is the designated 
     spear catcher.
       The Democrats' loudest complaint, moreover, is that Mr. 
     Bernanke and the Fed haven't been easy enough in printing 
     money. Majority Leader Harry Reid declared his support for 
     Mr. Bernanke on Friday, but not before extracting what he 
     said were concessions about future Fed policy.
       The Fed chief promised, said Mr. Reid, that he would 
     ``redouble his efforts'' to make credit available and that 
     Mr. Bernanke ``has assured me that he will soon outline plans 
     for making that happen, and I eagerly await them.''
       Redouble? The Fed has already kept interest rates at near 
     zero for more than a year, and it is buying $1.25 trillion in 
     mortgage-backed securities to refloat the housing bubble, 
     among other interventions into fiscal policy and credit 
     allocation. Is the Fed going to buy another $1.25 trillion, 
     or promise to keep rates at zero for another 14 months?
       Mr. Reid's declaration of a confirmation quid pro quo will 
     not reassure global investors who already fear that the Fed 
     lacks the political will to withdraw its historic post- 
     crisis liquidity binge soon enough to avoid new asset 
     bubbles.
       Our own view is that Mr. Bernanke is already far too 
     susceptible to political pressure. As a Fed governor, he was 
     Alan Greenspan's intellectual co-pilot last decade when their 
     easy money policies created the housing mania. When Congress 
     later put political pressure on the Fed to direct credit 
     toward housing, and even to student loans, Mr. Bernanke (who 
     was then chairman) also quickly obliged.
       More ominously for the next four years, Mr. Bernanke 
     continues to deny any Fed monetary culpability for creating 
     the mania. Shortly after the New Year, even with his 
     nomination pending, Mr. Bernanke issued an apologia that was 
     striking for its willingness to play to the Congressional 
     theory of the meltdown by blaming bankers and lax regulators. 
     We won't rehearse our decade-long monetary argument with Mr. 
     Bernanke today--see ``Bernanke at the Creation,'' June 23, 
     2009. But the chairman's refusal to acknowledge any mistakes 
     is one reason the dollar is so weak in global capital 
     markets. Investors are hedging their bets in commodities and 
     nondollar assets.
       Yes, much of Wall Street wants to see Mr. Bernanke 
     confirmed. The Street is currently making a bundle off Fed 
     policy, as it borrows at near-zero rates and lends long, and 
     the banks don't want that to end. The banks also loved 
     negative real interest rates in the middle of the last 
     decade, and we know how that turned out. Wall Street always 
     loves easy money--until inflation returns, or the bubbles 
     pop.
       Others argue that any alternative to Mr. Bernanke could be 
     worse, and that is certainly a risk. Mr. Geithner and White 
     House economic adviser Larry Summers couldn't be confirmed, 
     even in a Democratic Senate. In the short term if Mr. 
     Bernanke is defeated, Vice Chairman Donald Kohn might run the 
     Open Market Committee, and he shares Mr. Bernanke's contempt 
     for Fed critics. President Obama could also select San 
     Francisco Fed President Janet Yellen, but she thinks the Fed 
     should be even easier.
       Still, we can think of current or former presidents of 
     regional Fed banks who have hard money credentials. They 
     would also not carry the baggage of whatever Harry Reid 
     extracted as a price of confirmation.
       We agree that the Fed needed to ease money precipitously 
     when the financial markets suffered their heart attack in 
     late 2008, and we praised Mr. Bernanke for that at the time 
     and since. But the issue for the next four years is whether 
     the Fed can extricate itself from its historic interventions 
     before it creates a new round of boom and bust. We already 
     see signs that it has waited too long to move.
       The Fed as an institution is also under political attack in 
     a way that it hasn't been since the early 1980s, and that was 
     when Paul Volcker was being excoriated for being too tight. 
     That criticism has rarely if ever been leveled at Mr. 
     Bernanke. The next Fed chairman is going to need the market 
     credibility, and the political support, to raise interest 
     rates when much of Congress and Wall Street will be telling 
     him to stay at zero. That is the real reason to oppose a 
     second term for Chairman Bernanke.

  Mr. SHELBY. Mr. President, the first point the Wall Street Journal 
editorial highlights dealing with Chairman Bernanke's overt political 
activities states:

       Whether or not Mr. Bernanke is confirmed, the lesson we 
     draw--

  This is the Journal editorial staff--

     is that overly political Central bankers will eventually be 
     undone by politics.

  They always are.
  The Wall Street Journal goes on to conclude:

       Our own view is that Mr. Bernanke is already far too 
     susceptible to political pressure. As a Fed governor, he was 
     Alan Greenspan's intellectual copilot last decade when their 
     easy money policies created the housing mania.

  On Mr. Bernanke's loose money record, the Journal noted in these 
editorials:

       Mr. Bernanke was the intellectual architect of the decision 
     to keep monetary policy exceptionally easy for far too long . 
     . . He imagined a deflation that never occurred, ignored the 
     asset bubbles in commodities and housing, dismissed concerns 
     about dollar weakness and in the process, stoked the credit 
     mania that led us to where we are today in the financial 
     panic.

  Finally, the Wall Street Journal points out in regard to Chairman 
Bernanke:

       The Fed Chairman has shown he knows how to ease money . . . 
     But, that is the easy part of his job. The hard part, the 
     time when Central bankers earn their fame, is when they have 
     to take the money away. We see little at this point in the 
     Chairman's policy history or guideposts to suggest he will be 
     willing to endure the criticism that will come with 
     tightening money amid a lackluster recovery, if that is what 
     is required to protect the dollar or prevent an inflation 
     outbreak.

  For these and other reasons, the Wall Street Journal, one of the most 
widely recognized business publications in the world, opposes the 
nomination, as I do, of Chairman Bernanke.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DODD. Mr. President, how much time remains?
  The PRESIDING OFFICER. Three minutes remain.
  Mr. DODD. Totally?
  The PRESIDING OFFICER. The minority party has 8\1/2\ minutes 
remaining.
  Mr. DODD. I will use the 3 minutes, and I will inquire of my friend 
and colleague from Alabama, at what point are we going to conclude this 
debate?
  Mr. SHELBY. We are checking to see.
  Mr. DODD. Let me go ahead. I will assume we will probably wrap up the 
debate with 3 minutes remaining.
  We have a diversity of opinions, including from Paul Krugman, who is 
known as a more progressive economist, in favor of this nomination, 
although and albeit he has certain caveats he expressed about the 
nominee, Ben Bernanke; the Washington Post; and others as well. Warren 
Buffett was asked on CNBC about this nomination and he said: All I can 
say is, if you are going to turn him down, let me know a day or two in 
advance because I would like to sell off some stock. They asked him 
why, and he said because he believed the message to the markets would 
be a devastating one.
  The one thing about the Federal Reserve--and there are legitimate 
complaints about the Federal Reserve System--but what we don't need is 
for

[[Page 858]]

short-term politics to become the vehicle by which we decide Fed 
policy. The independence of the Fed has been a critical component for 
stability in our economy. I happen to believe--despite being the chair 
of the Banking Committee for all of 2007, as the Presiding Officer 
knows, I could not get the attention of the previous administration, 
including the Federal Reserve, about the mortgage crisis in our 
country. We had 12 hearings, the first of which was on February 7, 
2007, on this subject matter alone. So if I were going to decide my 
vote on this nominee on that basis, I would vote against Ben Bernanke 
because, frankly, it was a failure by the previous administration early 
on not to understand the gravity of this situation.
  But I can't make my decision solely on that. The fact is, as I said 
earlier, we have had a leader in the Federal Reserve over the last year 
and a half who virtually saved our economy from a predictable collapse 
had he not been there. Beginning in the fall of last year, when a group 
of us were in the room of the Speaker of the House, Democrats and 
Republicans, the Chairman of the Federal Reserve warned us, if we 
failed to act in a number of days, the entire financial system in this 
country and a good part of the world would melt down, to give an exact 
quote. I don't need to tell my colleagues that was sort of the economic 
equivalence of a 9/11 moment, when we were warned by the most important 
central banker in the world what could happen if we didn't act.
  As a result of Ben Bernanke's leadership, as well as others--people 
such as Judd Gregg, Bob Corker, Chuck Schumer, who worked on this, the 
leadership in the House--we were able to put together a terribly 
unpopular package, but 75 of us on that night in this Chamber voted for 
that very difficult proposition, to avoid the kind of catastrophe that 
would have happened. There are very few people I think who would have 
had the ability, the creativity, the imagination, and the courage to 
come up with these ideas. Ben Bernanke did. So as a result, we are in 
far better shape today.
  However, we are far from out of the woods. We have a foreclosure 
problem that is still huge. We have commercial problems that are coming 
along that are going to be massive. If we don't have a Chairman of the 
Federal Reserve but only an Acting Chairman, I don't know what that 
means--and particularly the individuals who helped to create the very 
imaginative vehicles that allowed us to come out of this problem. To 
have him walk away and find the Federal Reserve, this important central 
bank, without leadership at this critical moment, I think would be 
beyond shameful. It would be the height of irresponsibility.
  As Democrats and Republicans, the previous administration offered 
this nomination. Many of us supported it. We need to come together, at 
least in moments such as this, not to abandon our country over partisan 
politics or ideology and failing to understand that if there need to be 
reforms in the Fed, let's reform them, but let's not walk away from an 
importantly critical individual who has made a difference in our 
economy and our Nation. For that reason, I urge my colleagues to 
terminate this filibuster--vote to end that--and then vote to confirm 
Ben Bernanke as the Chairman of the Federal Reserve.
  I have been told I can speak until 3:20, but I will not take up all 
the time. As I said a moment ago, this is one of those moments where we 
need to step back and recognize the danger of our actions. This is not 
just a free vote. I know some people would prefer--they have the right 
to vote--to vote against the guy but hope he gets confirmed. That may 
work, but it is dangerously precarious. If we don't have 60 votes to 
end this filibuster, and if we don't produce the votes to confirm him, 
then I think this Congress, this body, regretfully, will have to bear 
the responsibility of abandoning the very people and situations we talk 
about today--jobs, the housing market, getting our economy back on its 
feet again--and anticipate the kind of reaction we will see in the 
markets and elsewhere, setting us back weeks, if not months or years, 
in our ability to get through this fragile period and allowing the 
hopes and aspirations and the confidence of the American people to 
grow.
  I know it is an awful lot to stake the future of all that on just a 
nomination, but this is not some Assistant Under Secretary of some 
other agency. It is the central bank Chairman of the most central bank 
in the world. It is a critically important component in us continuing 
our path of economic recovery. We will bear the collective 
responsibility of failing to meet that obligation if we walk away from 
this obligation by either continuing this filibuster or defeating this 
nominee.
  So I urge my colleagues, Democrats and Republicans--there is enough 
to battle about on how we are going to deal with these issues in the 
coming weeks, but on this matter let us send a message to the American 
people that we understand their frustrations, their worries, and we are 
doing everything we can to get us back on track again. Witness the 
President's remarks last evening.
  You have a laser-like focus on the economy and job creation in our 
country. Don't make that effort fail because we send a message to our 
markets and the world that we cannot confirm an individual who saved us 
from an economic catastrophe in our country.
  I urge my colleagues to pass the cloture motion to end debate and 
then, of course, to confirm Ben Bernanke as chairman of the Federal 
Reserve.
  With that, I yield back the remainder of the time and 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. DURBIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                             Cloture Motion

  Under the previous order, the clerk will report the motion to invoke 
cloture.
  The assistant legislative clerk read as follows:

                            Cloture Motion.

       We, the undersigned Senators, in accordance with the 
     provisions of rule XXII of the Standing Rules of the Senate, 
     do hereby move to bring to a close debate on 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. By unanimous consent the mandatory quorum call 
has been waived.
  The question is, Is it the sense of the Senate that debate on the 
nomination of Ben S. Bernanke, of New Jersey, to be Chairman of the 
Board of Governors of the Federal Reserve System shall be brought to a 
close?
  The yeas and nays are mandatory under the rule.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 77, nays 23, as follows:

                       [Rollcall Vote No. 15 Ex.]

                                YEAS--77

     Akaka
     Alexander
     Barrasso
     Baucus
     Bayh
     Bennet
     Bennett
     Bingaman
     Bond
     Boxer
     Brown
     Burr
     Burris
     Byrd
     Cardin
     Carper
     Casey
     Chambliss
     Coburn
     Cochran
     Collins
     Conrad
     Corker
     Dodd
     Dorgan
     Durbin
     Enzi
     Feinstein
     Franken
     Gillibrand
     Graham
     Gregg
     Hagan
     Harkin
     Hatch
     Inouye
     Isakson
     Johanns
     Johnson
     Kaufman
     Kerry
     Kirk
     Klobuchar
     Kohl
     Kyl
     Landrieu
     Lautenberg
     Leahy
     LeMieux
     Levin
     Lieberman
     Lincoln
     Lugar
     McCaskill
     McConnell
     Menendez
     Mikulski
     Murkowski
     Murray
     Nelson (NE)
     Nelson (FL)
     Pryor
     Reed
     Reid
     Rockefeller
     Schumer
     Shaheen
     Snowe
     Stabenow
     Tester
     Udall (CO)
     Udall (NM)
     Voinovich
     Warner
     Webb
     Whitehouse
     Wyden

                                NAYS--23

     Begich
     Brownback
     Bunning
     Cantwell
     Cornyn
     Crapo
     DeMint
     Ensign
     Feingold
     Grassley
     Hutchison
     Inhofe
     McCain
     Merkley
     Risch
     Roberts
     Sanders

[[Page 859]]


     Sessions
     Shelby
     Specter
     Thune
     Vitter
     Wicker
  The PRESIDING OFFICER. On this vote, the yeas are 77, the nays are 
23. Three-fifths of the Senators duly chosen and sworn having voted in 
the affirmative, the motion is agreed to.
  Under the previous order, all postcloture time is yielded back. The 
question is, Will the Senate advise and consent to the nomination of 
Ben S. Bernanke, of New Jersey, to be Chairman of the Board of 
Governors of the Federal Reserve System?
  Mr. ENSIGN. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  The PRESIDING OFFICER (Mrs. Shaheen). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 70, nays 30, as follows:

                       [Rollcall Vote No. 16 Ex.]

                                YEAS--70

     Akaka
     Alexander
     Barrasso
     Baucus
     Bayh
     Bennet
     Bennett
     Bingaman
     Bond
     Brown
     Burr
     Burris
     Byrd
     Cardin
     Carper
     Casey
     Chambliss
     Coburn
     Cochran
     Collins
     Conrad
     Corker
     Dodd
     Durbin
     Enzi
     Feinstein
     Gillibrand
     Graham
     Gregg
     Hagan
     Hatch
     Inouye
     Isakson
     Johanns
     Johnson
     Kerry
     Kirk
     Klobuchar
     Kohl
     Kyl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Lugar
     McCaskill
     McConnell
     Menendez
     Mikulski
     Murkowski
     Murray
     Nelson (NE)
     Nelson (FL)
     Pryor
     Reed
     Reid
     Rockefeller
     Schumer
     Shaheen
     Snowe
     Stabenow
     Tester
     Udall (CO)
     Udall (NM)
     Voinovich
     Warner
     Webb
     Wyden

                                NAYS--30

     Begich
     Boxer
     Brownback
     Bunning
     Cantwell
     Cornyn
     Crapo
     DeMint
     Dorgan
     Ensign
     Feingold
     Franken
     Grassley
     Harkin
     Hutchison
     Inhofe
     Kaufman
     LeMieux
     McCain
     Merkley
     Risch
     Roberts
     Sanders
     Sessions
     Shelby
     Specter
     Thune
     Vitter
     Whitehouse
     Wicker
  The nomination was confirmed.
  The PRESIDING OFFICER. Under the previous order, the motion to 
reconsider is considered made and laid on the table. The President will 
be immediately notified of the Senate's action.

                          ____________________