1/28/2010 — 

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 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 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.