A milestone in Bernanke’s nomination was reached this morning …. the Sunday political talk shows.  John McCain came out this morning against Bernanke.  So here’s what we know.  As of this morning (noon CT, January 24) …

Bernanke needs 60 votes to end a filibuster of his nomination (known as cloture).  After cloture, he then needs 51 to be reappointed.  So, the bogey is 60 for cloture.

Senators that announced they will vote for Bernanke

  • 27 (19 democrats, 8 republicans).  The bold names are those that voted for Bernanke in the Senate Finance committee.  16 in the committee voted “aye”.  So, Bernanke picked up another 11 senators since the committee’s vote.

Senators that announced they will vote against Bernanke

  • 16 (4 democrats, 11 republicans, 1 independent).  The bold names are those that voted against Bernanke in the Senate Finance committee.  7 in the committee voted “no”.  So, Bernanke lost another 8 since senators since the December 17 committee vote.

Analysis

So far 41 Senators have publicly declared for or against Bernanke.  63% (27) are for and 16 (37%) are against.  Remember he needs 60 of 100 votes, so this is very close.

Additionally, since the December 17, 2009 Senate Finance committee vote, Bernanke has picked up an additional 11 votes and lost another 8 votes.  Or, Bernanke picked up 58% of declared Senators and lost 42% since he passed the Senate Finance committee.  Again, very close to the 60 of 100 he needs.

Senators that announced they are undecided about Bernanke

  • 20 (13 Democrats, 7 Republicans) have publicly said they are undecided about Bernanke.  No one on the Senate Finance Committee is undecided.  But, we can be fairly sure many of these Senators have serious reservation about Bernanke despite Obama’s endorsement and winning approval from the Senate Finance Committee.  Expect a majority, if not a solid majority, of these undecided Senators to vote “no” unless something happens in the next few days to change the political dynamic (such as a stock market crash as discussed below).

Senators that have announced nothing about Bernanke

  • Above we identified the position of 63 Senators on Bernanke (for, against or publicly stated they are undecided).  That leaves 37 that have said nothing about Bernanke.  21 are democrats, 15 are republicans and 1 independent.  Given how this issue was moved front and center on Friday, expect a lot of these Senators to publicly take a position in the next 72 hours.

Conclusion

Bernanke’s reappointment vote is coming down to the wire, it is going to be close.  Recall that Bernanke was reappointed in August by Obama and the Senate Finance committee approved him on December 17.    Now with seven days until his term expires, his nomination has gone from a sure thing to in doubt.

And, if you think this is not political, consider the 36 senate senate up for election in December:

  • 8 said they would vote “aye” (5 democrats, 8 republicans)
  • 9 said they would vote “no” (3 democrats, 6 republicans)
  • 4 are publicly declared undecided and all are retiring and not running again ( 2 republicans and 2 democrats)
  • 15 have made no public statements, all are running for reelection (8 democrats, 6 republicans)

In other words, senators up for reelection are saying “aye” at a rate of 47%, not enough to get Bernanke reappointed let alone achieve 60% for cloture.  Party affiliation does not matter.

Thank the MA senate election and the desire of Senators to not support something that is unpopular.  Is Bernanke unpopular?  The following is from a CNBC survey taken in December.  Bernanke was about as popular as Bernie Madoff.  Do you want to say yes to a guy this unpopular if you’re in a tight reelection race?

<Click on table for larger image>

What Saves Bernanke?

In the last 18 months, the threat or an actual stock market crash seems to force Congress to do unpopular things.  In September 2008, after TARP failed to pass its first vote, the stock market crashed 777 DJIA points that day.  All that week everyone from Warren Buffett on down hyperventilated that failure to pass TARP would mean destruction in the financial markets.  A week later it passed.

In January 2009 it was learned that Tim Geithner had a “tax problem.”  Everyone from Warren Buffett on down hyperventilated that failure to approve Geithner would mean destruction for the financial markets.  Geithner passed Senate confirmation even though six other Obama nominees withdrew because of similar tax problems (including former Senate majority leader Tom Daschle).

Friday the stock market was down 220 DJIA points in part on fears that Bernanke might not get reappointed.  We disagree with this analysis.  We believe the market is down on fears the administration has no “plan B” if Bernanke goes down and it will take months for them to find a new Fed chief when the critical exit strategy needs to be formulated and implemented.  As noted above, Bernanke is not that popular so we do not believe it is about him.  It’s about consistency and continuity.  However, this might be a distinction without a difference.

Again everyone from Warren Buffett on down is hyperventilating that failure to approve Bernanke would mean destruction for the financial markets.  The question is if this threat and 220 DJIA point decline is enough to push Bernanke over the finish line.  Or, do the markets have to get significantly worse this week to scare the Senate into approving Bernanke?

Or guess is that Friday’s action is not enough as there are too many other cross currents between bank taxes, new banking rules (the “Volcker rule”) and the impact of the MA senate race to say last week’s decline was all about Bernanke.

In other words, if Bernanke does not pass, the markets get worse as the next Fed chief is months away and cannot be as dovish as “helicopter Ben” and his two trillion balance sheet.  If the markets do not get worse, Bernanke does not pass as the sense of urgency dissipates.

Unless Friday was enough to scare the Senate to approve Bernanke, and we do not believe it was, it seems like the Bernanke situation is near-term bearish.

Category: Federal Reserve

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

33 Responses to “Bernanke Nomination By The Numbers And What Saves Him”

  1. Invictus says:

    Should Bernanke not win reconfirmation, I would favor San Fran Fed’s Janet Yellen, who has repeatedly demonstrated that she “gets it.”

  2. Transor Z says:

    Thanks for re-posting this here, Barry.

    Here’s the deal, folks. Please call and/or email your senators today and of course say you are opposed to BB’s nomination. But also add the following:

    The Senate should not vote on cloture or take any further action on this issue until Scott Brown has been seated.

  3. Greg0658 says:

    hey money brainieacks – Q ?
    was chatting at the bar yesterday – do I have it right that the USofA Treasury holds the right to coinage and the entity called the US Federal Reserve has the right to print paper?

    If that paper was abolished, how much would my State Quarter collection be worth?

  4. km4 says:

    Once again a terrific diary from Badabing that currently has 245 recs

    Confirm Bernanke or Wall St. Could Blow Up…WTF?
    http://www.dailykos.com/storyonly/2010/1/24/829765/-Confirm-Bernanke-or-Wall-St.-Could-Blow-Up…WTF

  5. km4 says:

    My take is that Mr. fauz ‘hope and change’ is another pretender Pres. just like the dunce before him

    There is no will or commitment from either the Obama admin or mostly assclowns in Congress to change the US economy dependence on Financial capitalism ( asset bubbles, ponzi schemes ) so Bernanke will be confirmed and Americans ( with a larger number becoming more and more tapped out ) will get more ‘extend and pretend’ and kicking of the can down the road….

    When Sen. Sanders says to Obama Wake the F### up you know something stinks to high heaven….maybe this Vampire Squid from Hell

  6. ella says:

    There are two take away points in the Bernanke Reappointment. 1. Bernanke is yet one more “TBTF”. 2. This Administration can organize a full court press for Bernanke and Wall Street but not A public option/ expansion of medicare for main street.

    Choosing Wall Street over Main Street is a lose to the country.

  7. jpm says:

    Oh for pete’s sake. The best reason to keep him is that the markets will collapse?

    Gimme a break, if our markets are soooo fragile and weak, then we might as well take the bull by the horns and fix them now.

  8. Stillaway says:

    The Other White Meat will save Ben’s bacon.

    While we read this post deals are being made to replenish the pork barrels of those sitting on the fence: More bridges to no where, building a replica of the Great Pyramid of Egypt in Indiana, building a private pleasure boat harbor in Cleveland, etc.

    Just political drama to enable the looting.

  9. Lugnut says:

    It begs the question, who would they nominate as a replacement?

  10. olephart says:

    “failure to approve Bernanke would mean destruction for the financial markets.”

    Maybe we should just burn down the Reichstag that usually consolidates power.

  11. m111ark says:

    Bernanke will win re-nomination, not a squeaker but enough NO votes to give those in trouble with the electorate a soapbox from which to crow. It’s all theater of course, as all politics has ever been, even wall street’s gettin’ in on that action (GS doing God’s work). With wall street managing the market for their own interest and Washington spinning for theirs, the resultant environment generates greater instability… which of the circling black swans land first… methinks the leading candidate is another terrorist attack, or sovereign attack(Israel and Hezbollah poking each other) and don’t count out the CIA stoking the fires of revolution in Iran.

  12. ashpelham2 says:

    Distinction without a difference is correct. Bernanke doesn’t inspire that much confidence, but at least it’s continuity. If he does not get the confirmation, I’d look for a selloff. No idea how much or how little. If he does get the confirmation, things should level out.

    I can’t believe how fragile our economy is, and how important it is for people with power to act with their country’s best interests in mind. Still, it’s all about politics and jockeying for position. I guess I will never understand the mentality.

    I’m typing this all while sitting on the world’s longest conference call……

  13. Robespierre says:

    This is a joke Mr. B will be re-confirm regardless of what is good for the country. Tall Paul is being politically played by Obama to get back some of popular support he has lost by being employed by the bankers (Obama that is). It will be all stayed the same regardless of all the political noise around it.

  14. Transor Z says:

    I can’t believe how fragile our economy is, and how important it is for people with power to act with their country’s best interests in mind.

    This reads like faux-populism to me. It is ALWAYS important for people with power to act in their country’s best interests, not just in times of crisis.

    The consensus reality in America (which matters only if you believe in democracy) is that things have been deteriorating economically for a few decades now. A bubble economy that effectively stripmined the middle class has been facilitated by maintaining the illusion of prosperity via distraction, avoidance, and outright deception. Reliance on the Other White Meat (stillaway) has been boosted by the illusion of prosperity (“this robust economy won’t even notice a $5 million pork project”).

    In fact, America is in economic decline and has been for some time. Instead of cushioning the blow, the powerful have engaged in looting. I’m not one for conspiracy theories because I think the looters are just plain dumb. History is full of over-classes that lose that status in a heartbeat. But the details of those falls from power tend to be awfully ugly…

  15. Thatguy says:

    I wrote to my non-representatives in the Senate. Warner’s already selling us down the river, I see.
    The social contract is broken.

  16. franklin411 says:

    Again, I point out that the reply of the overwhelming majority (53%) was “What’s a Bernanke? Is that a kind of French sauce?”

    This is the silliest fight I’ve ever seen. Voting against Bernanke offers zero reward, since virtually nobody knows who he is outside of the political/economic junkies whose November votes will not be influenced by a minor issue such as this.

  17. Mannwich says:

    There’s our problem right there and why this nation cannot get back to activities that are productive and a net plus for the country. Every policy is shaped around how “the market” (otherwise known as a giant rigged c@sino) will like it or not like it. We all bow down to the demi-God markets. We are not worthy, we are not worthy. “The Markets” have replaced Christianity as our nation’s official religion.

  18. E says:

    This is exhibit A why the Fed should have less, not more, oversight from Congress.

    And much ado about nothing, really. Bernanke is Chairman of the Board of Governors, not king. He doesn’t set policy by himself. The Fed will operate with or without him.

  19. sharkbait says:

    @jpm: Oh for pete’s sake. The best reason to keep him is that the markets will collapse?

    That’s already happened (w/ Bernanke at the helm of the Fed?). Not a valid/logical argument. The real issue is the lack of “change you can believe in”. We have the same people in place that brought us this financial meltdown upon us.

    “Insanity: doing the same thing over and over again and expecting different results.” – Albert Einstein

    I hear he was a pretty sharp guy – Space-time physics, Nobel prize and all…

    To do the right thing – and effect real “change” – all of those (public + private) that led to the debacle should NOT be in positions of authority now – and probably in jail. We currently still have MAXIMUM MORAL HAZARD. The same thing can now happen again (and again)…

    Please let your Senators know your views! Here’s what I sent to my CO Senators last Fri.:

    —————————————————————————

    Dear Senator [Udall/Bennet],
    As an elected representative, and public servant for your constituents in the State of Colorado, I have three requests for your consideration. These issues are non-partisan, and of paramount importance.

    1) Please cosponsor S 604, The Federal Reserve Sunshine Act of 2009, and do everything in your power to see this bill through to a passing vote.

    2) Please do NOT vote to confirm Fed Chairman Ben S. Bernanke for another term. Based on the Fed charter:
    a) stable employment – failed
    b) stable interest rates – failed
    c) stable currency – failed
    d) stable finance system – failed
    the Fed has demonstrated gross incompetence in discharging its duties. As chairman, Dr. Bernanke bears the responsibility for Fed actions.

    3) Please vote AGAINST any further increases in the US debt ceiling. The proposed $1.9T increase is an offense to the American people (read taxpayers). The US MUST live within its means, including government. History repeats itself as we are after more than 200 years again experiencing taxation without representation. A vote for said increase is against the will of the people. Debt is slavery, and dishonors those who have given their lives for this country, and for our Constitutionally guaranteed freedoms.

    I hope that the recent upset in the Massachusetts Senate race will be in the forefront as you consider these three critical issues.

    Thank you.

    [sharkbait]

    —————————————————————————

  20. TakBak04 says:

    Bernanke might stay, but it’s looking like Geithner is in some deep trouble. Fair trade off?

    —–

    Geithner Must Go–And the Future of the Fed
    By William Greider/The Nation

    January 23, 2010

    The first casualty of the president’s political debacle will likely be Timothy Geithner, the severely over-confident treasury secretary well known as a lapdog of Wall Street. Geithner was effectively repudiated by the president last week when Barack Obama abruptly announced a new, more aggressive approach to financial reform. But the immediate threat to Geithner is the scandal of collusion and possibly illegal behavior gathering around the Federal Reserve Bank of New York for its megabillion-dollar takeover of insurance giant AIG.
    -snip-
    The House Oversight Committee, chaired by Edolphus Towns, has turned up damning evidence and called Geithner to testify the week of January 27. Committee investigators are poring through some 250,000 e-mails and subpoenaed documents and finding smoking revelations. House Republicans smell blood. House Democrats, given the present climate of popular discontent, are unlikely to rally around tainted goods.

    http://www.thenation.com/doc/20100208/greider

  21. Dogfish says:

    Ahh… the wielding of fear as a means of coercing the masses to support a decision that is against their own self-interest.

    “If Bernanke isn’t confirmed, the markets will tank!”

    “If we don’t invade Iraq, we’ll see mushroom clouds over Manhattan!”

    “If unions are allowed to exist, the economy will crash!”

    “If we don’t steal that baby’s candy, locusts will descend upon your offspring’s grain supplies, forever!”

    The direction our country has gone in the past two years is like a bad dream. It also makes me think back a great deal to what I read in Confessions of an Economic Hitman and Shock Doctrine. Not to be too conspiratorial sounding, but it sure seems like the looting wing of the Chicago School has come home to play their games after they have successfully stripmined most other continents throughout the decades (South America in the 70s and 80s to Eastern Europe and Asia in the 90s…)

    Surely this will all end well.

  22. Dogfish says:

    Oh, and TakBak04, I would take Bernanke over Geithner everyday of the week. Geithner strikes me as a wormy little incompetent who got placed in that position because of his obedience. Bernanke is almost the same, but with a beard. I like beards.

  23. ZedLoch says:

    I think Republicans are in a tighter spot on this. If we get rid of Geithner/Bernanke, who would they be replaced by? They are both benign to the establishment. But with populism boiling over, there’s a good chance we get some socialist with anti-Wall St. sentiment.

    Or maybe someone else who is just as benign to the establishment?

  24. bsneath says:

    TakBak04 Says:
    January 25th, 2010 at 10:49 am
    Bernanke might stay, but it’s looking like Geithner is in some deep trouble. Fair trade off?

    YES

  25. alfred e says:

    Fact: Whether Bernanke is confirmed or not is irrelevant.

    Actually it’s better if he is confirmed.

    The anger over the elite stupidity subsides if he’s tossed overboard.

    Same with Geithner. If he’s tossed: “Change you can believe in” .

    NOT.

  26. flipspiceland says:

    Bernochio is a shoo-in.

    No ifs, ands, or butts.

    All the rest is just heated conversation.

    Time to look past this media inspired conflict and concentrate on what’s really important i.e., How can we get Al Queda to concentrate on what really needs fixed in this country? If Binny is such a smart guy and knows what these characters, appointed by Lord blankfein are doing to the world then why not focu his substantial resources on them instead of innocents?

    What’s up with that?

  27. DonF says:

    Bringing up the subject from this weekend, the headline on wsj.com is “Support for Bernanke Gains Momentum” The second paragraph completely contradicts it too.

    Although I think Ben made some major mistakes, to me, it is the seemingly inability to recognize (or admit–I can’t tell if he actually believes what he is saying) his failures in all of this. If he is not able to recognize and hence learn from his mistakes, then I am not convinced that he is the right person to move forward with.

    I’d also like someone in there that is serious about financial reform, and I am not convinced that is Ben. Who that is, I don’t know, but that’s why I elected two Senators and have wrote them both accordingly. Neither have opined an opinion yet.

  28. gordo365 says:

    I love the “devil you know” comments by some of his reluctant supporters – like “he may be bad, but the new guy might be worse…”

    Can you imaging a CEO saying – “We’ve lost confidence in the VP of manufacturing since costs are up and product quality issues are hurting our brand – but the new guy might be worse – so lets keep him…”

    Politics. Ha.

  29. TakBak04 says:

    The AP calls it for early for Bernanke :)

    ———-
    Stocks recover as Bernanke’s prospects improve
    Stocks stabilize as hopes improve for Bernanke’s reappointment, break worst slide since March

    By Stephen Bernard and Tim Paradis, AP Business Writers , On Monday January 25, 2010, 1:34 pm

    NEW YORK (AP) — Stocks are recovering Monday from last week’s bruising as prospects brightened that Federal Reserve Board Chairman Ben Bernanke would be appointed to another term.

    The Dow Jones industrial average skidded 5.2 percent from Wednesday to Friday of last week as President Barack Obama stepped up his campaign to tighten oversight of banks. Signs last week that Bernanke’s appointment could be in trouble contributed to the big drop.

    http://finance.yahoo.com/news/Stocks-recover-as-Bernankes-apf-1012591412.html?x=0&sec=topStories&pos=1&asset=&ccode=

  30. Transor Z says:

    AP probing its wrong call on Super Tuesday
    http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003707756

    From Feb 6, 2008. The AP erroneously declared Hillary Clinton the winner of the Missouri primary.

  31. TakBak04 says:

    Yves over at Naked Capitalism has some good stuff about Bernanke up today. Including some activism (if anyone is interested) along with reasoning as to why he shouldn’t be reappointed.

    ——

    Tell Senate “No” on Bernanke Cloture

    The Administration put on a full court press this weekend to shore up Bernanke’s confirmation vote, which was looking increasingly doubtful as of Friday. Over the weekend, Democratic and Republican leaders in the Senate said they were confident that Bernanke would be confirmed. The media took up the call, with stories appearing in virtually every MSM outlet blaring that Bernanke was in.

    But how seriously should we take this declaration of victory? Contrary to the efforts to present the confirmation vote as sealed, it is not in the bag:

    http://www.nakedcapitalism.com/2010/01/tell-senate-no-on-bernanke-cloture.html

  32. TakBak04 says:

    flipspiceland Says:
    January 25th, 2010 at 1:01 pm

    Bernochio is a shoo-in.

    No ifs, ands, or butts.

    All the rest is just heated conversation.

    ——–

    I would have agreed with you…but the Geithner Mess coming out might give some length to his eventual reappointment. It might wait out a bit….to see what ELSE comes out.

    Whatever…

    Seems hopes get ratched up and then dashed down once again for truth to come out and some accountability.

    Perhaps you are correct…but I’m thinking there might still be some pot holes on the road for Bernanke and Geithner to blow their tires and even lose the rims..and sit on the side of the road worrying about the muggers from the woods getting them before the “help” comes for repairs and wondering if they are left to the muggers or if “help is on the way.” Gotta be an interesting time for them. Great Careers…so CHOSEN….but sometimes that just ain’t enough.

    Who knows….?

  33. TakBak04 says:

    Mannwich Says:
    January 25th, 2010 at 10:22 am

    There’s our problem right there and why this nation cannot get back to activities that are productive and a net plus for the country. Every policy is shaped around how “the market” (otherwise known as a giant rigged c@sino) will like it or not like it. We all bow down to the demi-God markets. We are not worthy, we are not worthy. “The Markets” have replaced Christianity as our nation’s official religion.

    ————-

    Well said…sad though what it means even for those who are not Christian but who like to think they have some “ethical guidelines” as to how they govern their businesses and interactions with their fellow human beings and dwellers on this Earth.

    Replacing Money with Ethics…Values of how we treat our fellow human beings.

    The “Golden Rule” still applies as a basic guideline: “Do Unto Others as You Would Have Them DO Unto You!”

    Problem is: that simple rule can be construed by sociopaths, narcissists and psychopaths to mean something very different. In our society today…diverse views are there. Still…I think that most of us would want to abide by that old “Golden Rule.” It’s hard to find any common ground of thought these days with all our systems flashing “RED ALERT.” Breakdown of everything.

    Maybe we need to start simple and build upwards for a new “Ethics” based on something other than Doctrinaire Religious doctrines. Maybe something more encompassing that could get to the basic “human” agreements as to what gives our civilization a reason to survive?

    whatever..sorry…off on tangent.