RPT-UPDATE 2-US Senate could OK Bernanke nomination on Thursday

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* Final confirming vote expected on Thursday, aides say

* Nomination must first clear 60-vote procedural hurdle

* Despite opposition, Bernanke expected to win second term

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By Thomas Ferraro and Mark Felsenthal

WASHINGTON, Jan 27 (BestGrowthStock) – The U.S. Senate on Thursday is
expected to hold a final confirming vote on Ben Bernanke’s
nomination for a second term as chairman of the Federal Reserve,
Senate aides said.

The aides said on Wednesday that a vote on confirmation would
likely come shortly after senators vote to clear a procedural
roadblock to the nomination. Lawmakers could have up to 30 hours
to debate the nomination, but are not expected to use all the
time.

“We anticipate the confirmation vote tomorrow,” a Democratic
aide said. “We think the (confirmation) vote will be tomorrow,” a
Republican aide said separately.

Bernanke is widely expected to win confirmation, but only by a
relatively narrow margin.

The surprise election last week of a Republican to a
Massachusetts U.S. Senate seat long held by Democrats underscored
voter anger about the economy’s woes and undercut support for
Bernanke, a chief architect of bailouts for Wall Street banks.

While the nomination appeared on track before then, the
Massachusetts result sent shock waves through Washington. A number
of senators facing tough reelection battles in November voiced
their opposition, raising doubts about whether Bernanke could be
confirmed.

A full-court press from President Barack Obama and Senate
Democrats, however, appears to have mustered the 60 vote
supermajority needed to overcome efforts to block the nomination.

Senate Majority Leader Harry Reid’s decision on Tuesday to
schedule a procedural vote for Thursday to clear any roadblocks
signaled a belief the votes were secured.

Even so, Bernanke, whose first four-year term ends on Sunday,
is poised to garner the fewest “yes” votes for any nominee to be
Fed chairman in the 32 years the Senate has been playing a role in
approving the nominations. Previously, Paul Volcker, who triggered
back-to-back recession with sky-high interest rates, held that
honor in 1983 with 84 “yes” votes.

A Reuters poll showed 50 Senators support Bernanke, while 21
oppose him. The rest of the 100-member chamber is publicly
undecided.

FED SEEN WEAKENED

If Bernanke wins a second term, as expected, he will be
leading an institution reshaped by the financial crisis and deep
recession, and the shifting politics that ensued.

His unexpectedly rocky confirmation battle and the mauling
Treasury Secretary Timothy Geithner received during a
congressional hearing on Wednesday over the taxpayer-funded
bailout of insurer American International Group Inc (AIG.N: ) in
2008 vividly illustrated the depth of outrage over the recession
and expensive bank bailouts.

“The politically neutral and independent Fed has really been
politicized this week, probably to its detriment,” said Chris
Krueger of Concept Capital, a private firm that tracks Washington
for institutional investors.

The hunger for a scapegoat could translate into congressional
action to strip the Fed of direct supervisory power over banks or
its responsibility for consumer protections, as proposed by some
lawmakers.

Congress is also likely to mandate much more extensive
supervision of the Fed’s activities, including emergency lending,
and possibly even monetary policy decisions.

In considering Bernanke’s nomination, some lawmakers pressed
him to do more for the economy, highlighting the unusually high
degree of political pressure now on the Fed.

“I made it clear that to merit confirmation, Chairman Bernanke
must redouble his efforts to ensure families can access the credit
they need to buy or keep their home, send their children to
college or start a small business,” Reid said on Friday. “He has
assured me he will soon outline plans for making that happen, and
I eagerly await them.”

The Fed guards its independence jealously and is more likely
to respond to the political mood by pushing forward on
consumer-friendly regulatory initiatives than by steering monetary
policy in a direction palatable to lawmakers.

Investment Research

RPT-UPDATE 2-US Senate could OK Bernanke nomination on Thursday