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And I'm Melissa Block.
President Obama took a break from his vacation on Martha's Vineyard today to conduct some White House business. The president announced he is reappointing Federal Reserve Chairman Ben Bernanke to a second term.
As NPR's John Ydstie reports, the president's choice of Bernanke today wasn't a surprise, but it wasn't always a sure thing either.
JOHN YDSTIE: Bernanke was originally appointed by President George W. Bush; that four-year term expires in January. And, in fact, right after Mr. Obama's election last November, it looked as though Bernanke might be a one-term wonder. The economy was in a tailspin. Bernanke had taken some controversial steps, like helping to bail out Bear Stearns and AIG, but letting Lehman Brothers fail. The odds makers were betting Mr. Obama's chief economic adviser, Larry Summers, might become the next Fed chairman.
But today, with Bernanke standing beside him at a school in the town of Oak Bluffs, Massachusetts, Mr. Obama painted a glowing picture of the current Fed chairman. The president said Bernanke had led the Fed through one of the worst financial crisis ever.
President BARACK OBAMA: As an expert on the causes of the Great Depression, I'm sure Ben never imagined that he would be part of a team responsible for preventing another. But because of his background, his temperament, his courage and his creativity, that's exactly what he has helped to achieve. And that is why I am reappointing him to another term as chairman of the Federal Reserve.
YDSTIE: Bernanke thanked the president for his support and offered this pledge.
Mr. BEN BERNANKE (Chairman, Federal Reserve): Mr. President, I commit today to you and to the American people that if confirmed by the Senate, I will work to the utmost of my abilities with my colleagues at the Federal Reserve and alongside the Congress and the administration, to help provide a solid foundation for growth and prosperity in an environment of price stability.
YDSTIE: The president also praised Bernanke for his bold actions and out-of-the-box thinking when faced with a financial system on the verge of collapse. David Kotok, chairman of Cumberland Advisors of Vineland, New Jersey, says that bold action may have turned the economy around, and with it, Bernanke's future at the Fed. But, says Kotok, in the early stages of the crisis, Bernanke's actions weren't particularly bold.
Mr. DAVID KOTOK (Chairman, Cumberland Advisors): Before the failure of Lehman Brothers and the events that occurred a month or two before, the Fed was operating as it pretty much had done in the past. That all changed after the crisis really became a waterfall.
YDSTIE: And as the credit freeze intensified, Bernanke became very creative, developing intricate programs to pump money into various corners of the economy. Those programs supported lending for businesses, students and mortgages, to name a few. But Bernanke went beyond domestic action, says Kotok, addressing the issue globally by engineering cooperation among central banks around the world to provide coordinated stimulus. Now, says Kotok, the challenge for Bernanke will be to coordinate the global withdrawal of that stimulus.
Mr. KOTOK: That, too, is going to require a major effort, and we'll find out if he can accomplish it. Because the time is going to come when stimulus has to be withdrawn, and if you don't do it in a coordinated way, there's a risk of a currency crisis.
YDSTIE: Bernanke's big domestic challenge will be to withdraw the massive stimulus before it boosts growth so much that it causes damaging inflation. But he's got to be careful not to do that too soon or the recovery could be choked off.
John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
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