President Obama nominated Fed Chairman Ben Bernanke for another four-year term on August 25, “because of his background, his temperament, his courage, and his creativity,” in fighting the financial crisis that is now entering its third year. The President cited the way Bernanke tackled, “a financial system on the verge of collapse with calm and wisdom; with bold action and out-of-the-box thinking that has helped put the brakes on our economic freefall.”
House Financial Services Committee Chairman Barney Frank (D-Mass.) said he would “strongly support” the nomination. But the nomination is already controversial, in part because Bernanke was the Fed chairman for 18 months before the markets really began to unravel, in mid-2007. He didn’t seem to recognize the looming catastrophe.
As Bernanke said in a May 2007, speech, he believed that the damage to the economy resulting from subprime mortgages, which were even then starting to melt, was “limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.”