Page last updated at 20:32 GMT, Tuesday, 25 August 2009 21:32 UK

Bernanke named for new Fed term

Obama: "We will pass the reforms necessary to protect consumers, investors, and the entire financial system"

President Obama has confirmed that he has nominated Ben Bernanke for another term as chairman of the US central bank, the Federal Reserve.

The president took a break from his summer holiday to make the announcement.

Mr Bernanke has been praised for taking action to bail out failing banks, which Mr Obama believes has limited the effects of the economic crisis.

Mr Bernanke's initial four-year tenure is to come up for renewal in January.

'Price stability'

Mr Obama said Mr Bernanke had helped to prevent a repeat of the Great Depression.

While I have had serious differences with the Federal Reserve over the past few years, I think reappointing chairman Bernanke is probably the right choice
Christopher Dodd, Senate Banking Committee chairman

"Ben approached a financial system on the verge of collapse with calm and wisdom, with bold action and outside-the-box thinking that has helped put the brakes on our economic free-fall," the president said.

"Our auto industry is showing signs of life. Business investment is showing signs of stabilising. Our housing market and credit markets have been saved from collapse.

"Taken together, all of these steps have brought our economy back from the brink. They are steps that are working," he added.

Mr Bernanke said that the Federal Reserve had "been challenged by the unprecedented events of the past few years".

And he vowed that, if confirmed in his post by the Senate, he would work with his fellow Fed members towards "growth and prosperity in an era of price stability".

Market support

The Fed, along with the US Treasury, organised the $700bn (£496bn) bank bail-out plan in October 2008, and has since spent an additional $3 trillion propping up the credit markets and trying to boost the economy.

There had been speculation that Mr Bernanke would be replaced, perhaps by Larry Summers, who is the White House chief economic adviser.


But that would have gone down very badly with the financial markets, who see Mr Bernanke as the person who almost single-handedly staved off a meltdown, says the BBC's Greg Wood in Washington.

Mr Bernanke was named as Federal Reserve chairman by Mr Obama's predecessor, George W Bush, in 2005.

His re-appointment must be confirmed by the Senate.

While this is expected to be a formality, especially as Mr Obama's Democrats control the upper house, Mr Bernanke has faced criticism from both Democrats and Republicans over the sheer size of the banking rescue package, with many criticising it as excessive.

"While I have had serious differences with the Federal Reserve over the past few years, I think reappointing chairman Bernanke is probably the right choice," said Senate Banking Committee chairman and leading Democrat, Christopher Dodd.

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