Bernanke kept on for 2nd term at Federal Reserve

Ben Bernanke, the man who was the architect of the US financial recovery programme, has been re-appointed for a second four-year term as chairman of the US Federal reserve.

Although President Obama had the chance to choose a new leader of his own, he decided to go with the man who many now credit with the recovery in the global financial markets, saying "Ben approached a financial system on the verge of collapse with with bold action and outside-the-box thinking that has helped put the brakes on our economic freefall."

Bernanke was first promoted to the job in 2005 by the Bush regime and it was thought that a new chairman would be appointed by President Obama. However Bernanke proved to be very popular with economists and the public alike, shrugging off the criticism of some who accused him of being too slow to recognise the extent of the financial crisis initially.

President Obama made the announcement during his holiday in Martha’s Vineyard and reaction around the world was positive.

Mervyn King, the governor of the Bank of England expressed his congratulations, and Jean-Claude Trichet of the European Central Bank said "The Federal Reserve and the ECB have, together with other central banks, initiated an unprecedented level of close cooperation, which has been key in coping with the present situation. I very much look forward to continuing that."

The announcement helped the Dow Jones Industrial Average to an 80 point gain, although an improvement in one of the most important US housing indicators also contributed to the move. The S&P/Case-Shiller index rose 1.4 per cent in the most recent quarter, its best performance for three years.

WHAT THEY ARE SAYING
Jeffrey Kleintop, chief market strategist at LPL Financial, the Independent: "We do know what might have happened if someone else was nominated by the President. History shows us the reaction can be materially negative for the markets. In 1987, President Reagan nominated Alan Greenspan and the 10-year Treasury yield saw one of the biggest ever one-day moves.A big move in rates to the upside resulting from the uncertainty associated with a new Fed head would be unwelcome."

Thomas Cooley, Professor of Economics at New York University’s Stern Business School, the Times: "He’s seen as a serious person who really believes in the mission of the Fed and that means he’s well respected within the Fed system" ·