Resistance is mounting for the re-appointment of Ben Bernanke to the Federal Reserve chairperson position. Those in favour of re-appointment heavily outweigh the dissenters but I sense a shift in the mood. MarketWatch reports that a senator is attempting to block the re-appointment:
Sen. Bernie Sanders placed a hold Wednesday on the nomination of Ben Bernanke for a second four-year term as chairman of the Federal Reserve, saying it's time for a change in economic policies.
Sanders' hold could delay the vote on Bernanke's confirmation, but likely won't derail it. The hold means the Democratic leadership would need at least 60 senators to agree to bring the nomination to a vote, instead of the 50 needed without the hold.
As I have said many times before, Ben Bernanke is not perfect but he is the right person for the job right now. If USA is indeed undergoing a deflationary bust as I suspect, Bernanke is one of the most qualified people out there. This doesn't mean that he will make all the right decisions but I am not too fond of other candidates that have been floated around.
Americans have a right to be wondering about all the central bank policies—a lot of amounting to transferring huge quantity of wealth from taxpayers to bondholders of financial institutions—but blocking the appointment is not going to accomplish much.
I also don't like the fact that the US government is attempting to strip the Federal Reserve of some powers and shift it towards the government. I am not too knowledgeable about government agencies and American laws but I do think some changes can be made. Clearly the FedRes didn't regulate the banks properly! However, some of the wide-ranging proposals being floated around would significantly strengthen various government agencies at the expense of the central bank—I don't like these plans at all.
The fact that the Federal Reserve is largely independent and is partly owned by private owners* (essentially private banks) causes problems and damages society at times. However, this is also what makes monetary policy in America much better than most other countries. The Federal Reserve has acted independently and largely gone against the government (the most recent example was in the 80's when the FedRes tightened monetary policy substancially against the wishes of most politicians.)
* I'm not an expert on banking but my impression is that the Federal Reserve is very unusual. Unlike other central banks, such as Bank of Canada or Bank of England, the Federal Reserve's shareholders are private banks such as Citigroup. This creates an interesting (largely theoretical) situation whereby foreigners can have sizeable impact on the monetary policy of USA. For instance, the biggest shareholder of certain leading private banks have been foreigners at times, and hence they, indirectly, influence the FedRes. However, as far as I know, the private banks only hold shares in one branch bank (USA is divided into regions and have branches representing regions) so the influence is quite limited.
In any case, the power of the private banks are limited. The US government has powerful oversight, such as deciding who to appoint as FedRes chairperson, and controls the currency and banking laws. And, of course, the government controls the military and hence, the FedRes, even if privately owned, is a subordinate of the government, which in turn is a servant of the voting population... or at least that's how I think a democracy is supposed to work.