Despite an economy that is not yet out of the woods, President Barack Obama has nominated Federal Reserve Board Chairman Ben S. Bernanke for a second four-year term.
After the president himself and perhaps the secretary of the Treasury, the Fed chairman is the most important U.S. government financial officer. With the country's economy its largest problem, this appointment is a critical one, touching on the well-being of all Americans.
The choice of Mr. Bernanke, a former Princeton economist, was not an easy one for Mr. Obama or now for the Senate, which must confirm or reject the nomination. There is a case to be made for letting his first term expire at the end of January. Mr. Bernanke presided at the Fed during the years leading up to the current recession. He, the Federal Reserve Board, then-Secretary of the Treasury Henry Paulson, not to mention President George W. Bush, were the financial air controllers in the tower as the American and subsequently the world economy moved toward a historic pileup.
Now Americans are faced with still-mounting job losses, a high unemployment rate, mortgage foreclosures and credit-card defaults. The policies of Mr. Bernanke and the succeeding Treasury secretary, Timothy Geithner, took care of the bankers and financial house heads, many of whom reaped million-dollar bonuses while the nation's taxpayers had to pour in trillions to rescue the banking system.
So why give Mr. Bernanke another four years? First, Mr. Bernanke responded boldly and decisively when the storm broke. Second, continuity is needed in this critical post at a time of nagging uncertainty. That sense of stability at the top is just as important for domestic investors as for foreign creditors, who hold about 25 percent of U.S. treasury bonds. It would be unfortunate if China's action in June to reduce its holdings of U.S. debt by $25 billion became a flood. A steady hand at the Fed could reinforce trust.
On balance, the reasons to keep Mr. Bernanke carry the day, although Senate confirmation hearings may provide scrutiny of not only the chairman's approach but also administration policy on the economic recovery. Americans should welcome that examination at least as much as Mr. Bernanke's confirmation.