Bernanke decision met with approval

WASHINGTON (AP) — Analysts, lawmakers and the financial industry generally reacted positively to news that Ben Bernanke would be renominated as Federal Reserve chairman. But some offered a dose of constructive criticism.

Here’s a sampling of reaction to the news from around Washington and Wall Street:

UChristopher Whalen, managing director, Institutional Risk Analytics:

“Bernanke is slowly earning his way back into some kind of credibility with the Street, and it made sense to keep him going. I don’t think there were any pressing, wonderful alternatives, politically speaking.

“If he can start to say no and exercise some leadership on fiscal issues ... he could earn his stripes back in a lot of ways that [his predecessor Alan] Greenspan completely missed, simply because he didn’t exercise the bully pulpit the way [his predecessor Paul] Volcker did.

“He needs to exercise more independence, to emulate [FDIC chairman] Sheila Bair. That’s what an independent agency is for.”

UBradley Sabel, partner, Shearman & Sterling LLP and former bank examiner with the Federal Reserve Bank of New York:

“He took some very, very radical steps by having the Fed use [its emergency lending powers] for the first time in 70 years with Bear Stearns. He just decided it had to be done. And then to take the further steps he did in September and October showed amazing foresight and an understanding that there truly was an emergency.

“Is everyone going to agree with everything he’s in favor of? No, but you’ve got to look at the big picture, the things that are most important. In the big picture, things — the economy, the plans they’ve got in place [to continue stabilizing the financial system] — he’s done a great job.”

USimon Johnson, former chief economist with the International Monetary Fund, now a professor at the Massachusetts Institute of Technology’s Sloan School of Management:

“I don’t have a better candidate in mind, but I’m worried Bernanke has the same, two big weaknesses that Greenspan had: keeping interest rates too low and being super-pro-finance. Greenspan’s philosophy was that you don’t have to worry about spotting bubbles; you can just clean up after them. Bernanke hasn’t said anything different.

“The answer is much tougher regulation and much tougher capital requirements [for banks], and the consensus is moving in that direction. So saying we’ll just let bubbles happen is a bad idea — very costly and dangerous.”