Bernanke, the man who "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," has been nominated by Barack Obama for a second four-year term as Chairman of the Federal Reserve.

Thus, Obama silenced the market debate on the fate of Bernanke and the uncertainty thereof within the administration and in financial markets that had been brewing for quite sometime. Of course, there is nothing radical about it. Perceiving the Fed chairmanship as "a non- or not-very-partisan technocratic position of immense power and freedom of action," all of the past four Presidents had reappointed the Fed Chairman from the opposite party. Nonetheless, with his announcement, "As an expert on the causes of the Great Depression, I'm sure Ben never imagined that he would be part of a team responsible for preventing another ... that's exactly what he has helped to achieve," the President could indeed send across a strong message that has tremendous political connotation—"The worst is over."

The decision was, of course, widely hailed by the Wall Street and politicians as well. But some, including economists of repute, have questioned his reappointment on many counts: one, Bernanke, believing in the philosophy that Central Banks are well-placed to clean up the mess once asset bubbles burst rather than preempt them, allowed loose monetary policies prevail over longer periods that indeed fueled the financial frenzy in the first place; two, instead of arresting the irrational consumerism displayed by ordinary Americans via borrowed capital, he threw the blame on `global saving glut' and the savers of capital from Asia; and three, like his predecessor, he too, believing that markets know better than regulators, abrogated regulating the irresponsible penchant of banks for extreme leverage, derivatives explosion and aggressive mortgage lending that had all cumulatively thrown the financial markets out of control; four, his rescuing the American International Group Inc. through a Fed-orchestrated program and his role in pushing Bank of America Corp. to complete its takeover of Merrill Lynch & Co.; and five, his misreading about the likely impact of Lehman's failure on the markets and letting it go bankrupt that ultimately triggered the global meltdown.

The Analyst Magazine, Ben S Bernanke, Financial System, Financial Markets, Fed-orchestrated Program, US Economy, Financial Consequences, Monetary Policies, Government Debt, Financial Crisis, Central Banks.