• Lisa Simpson
• Jan 30,2010
• In: Real Estate

Bernanke Holds his Fort Against Criticism Targeting his Handling of the Real Estate Crisis

Ben Bernanke, the chairman of the Federal Reserve, is holding his own facing a barrage of criticism targeting his handling of the real estate crisis. He continues to work all through the week but lately he took two days rest – it being a record for him since the last two years. He had to attend to the wedding of his son. Lately he sometimes returns home for dinner and even occasionally makes an appearance for baseball games.

In all likelihood Bernanke would be given a heroes welcome when bankers and economists from across the globe converge for the annual retreat of Federal Reserve in Jackson Hole, Wyoming. Washington as well as Wall Street would be taken aback if Bernanke did not win a second term although Bernanke is a Republican and was first appointed by Bush.

White House however is remaining tight lipped. Although Bernanke’s credentials in financial circles have always been high, lately both he and the central bank have been facing ire over the handling of certain bailouts and the limitations of the powers of the Federal Reserve.

Bernanke is not happy about many in the Congress not giving the Fed sufficient credit for what it has undertaken. Privately he has contacted hundreds of legislators recently to explain the policies undertaken by the Federal Reserve pertaining to the financial crisis.

Bernanke is being lauded by his peers for pulling out the economy and preventing further damage. He had deviated from the usual norm and aggressively courted rescue measures like bailouts, quick mergers, emergency loan granting, vast printing of new money and staggeringly low interest rates.
Even Nouriel Roubini, his toughest critic has nothing but praise for him. Roubini said, “He realized that the great recession could turn into the Great Depression 2.0, and he was very aggressive about taking the actions that needed to be taken.” Roubini had been criticizing the Federal Reserve officials for not taking note of the impending housing crisis when it was bubbling.

But it is not curtains to troubles as yet. Bernanke continues to be uneasy with unemployment at 9.4%. The central bank itself makes the forecast that it will remain so all through 2010.

White House is silent about the future of Berananke. Lawrence Summers, Janet Yellen and Alan Blinder are the likely candidates being proposed by the Democrats to replace Bernanke. Bernanke is battling two fronts, economic and political. The Federal Reserve has to come to a decision about reversing all assistance measures without putting the economy on reverse gear. On the political front the question is about its power and independence.