CNNMoney.com | November 23, 2009
By Jennifer Liberto
Federal Reserve Chairman Ben Bernanke has a tough road ahead.
Very tough.
Bernanke, whose four-year term expires in January, is certain to face a contentious Senate banking panel at his confirmation hearing, set for Dec. 3. He is also defending against the sharpest attack on Federal Reserve powers ever.
The latest blow came last week, when a House panel overwhelmingly agreed to tack on to must-pass regulatory reform a proposal to dig into the Fed's books, despite attempts by Rep. Barney Frank, D-Mass., to make it less intrusive.
Fed watchers say they expect that Bernanke will be confirmed for a second term as chairman. But he may get the fewest favorable votes on record - and end up at the helm of a vastly changed Federal Reserve.
"It's going to wind up to be a very different institution," said American Enterprise Institute scholar Vincent Reinhart, a former director of the Fed's division of monetary affairs. "At least on the Federal Reserve part, Congress is going to converge on something that's tougher on the Fed. It's a way to vent anger. And fundamentally people are angry."
What Congress has in store for the Fed
While many credit Bernanke for saving the economy from falling into the next Great Depression, some in Congress blame the Fed - and Bernanke - for having failed to restrain the housing bubble. Others say he has gone too far in the financial system bailouts.
"We're in a very populist era and that populism is manifesting itself in a dislike and distrust in large institutions," said Washington policy analyst Brian Gardner of investment firm Keefe Bruyette & Woods. "That means the Fed is one of those targets."
But the proposal to allow for congressional audits of the Fed is taking that anger one step further.
Since the 1980s, Fed antagonist Rep. Ron Paul, R-Texas, whose recently published book is entitled End the Fed, has been trying to pass bills to curb Fed powers.
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