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(photo credit: AP)
Federal Reserve Chairman Ben Bernanke, widely credited with taking aggressive action to avert an economic catastrophe after the financial meltdown last fall, will be nominated by President Barack Obama for a second term, The Associated Press learned Monday night.
Obama plans to make the announcement on Tuesday during a break from his vacation on Martha's Vineyard. A senior administration official discussed the nomination on the condition of anonymity because it was not yet public.
In remarks prepared for the announcement, Obama praised Bernanke for leading the country through a financial crisis and, with his expertise on the Great Depression, helping to prevent a similar crisis.
"Ben 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," Obama said in prepared marks obtained by the AP.
In sticking with Bernanke, Obama is looking to reassure the financial sector as well as foreign central banks that his administration has no plans to change course on its largely well-received approach to rescuing the industry from its meltdown or its management of overall monetary policy.
Bernanke has won admiration from Democrats and Republicans on Capitol Hill even as some lawmakers have urged him to retain the Fed's independence and warned him not to become too cozy with the administration. Any move to replace Bernanke could have been perceived as injecting politics into the Fed, especially if Obama had turned to Lawrence Summers, his top economic adviser, as Bernanke's replacement.
Bernanke, at a Fed conference in Jackson Hole, Wyoming, last week, was sanguine about the global economy, saying it was "beginning to emerge" from the recession and that the worst had been avoided.
For Obama, there was little political downside in choosing to nominate Bernanke to a second term. The move displays bipartisanship and a steady, unchanging hand on the economic rudder. With his hands full attempting a health care overhaul, changing the head of the central bank would have been a distraction Obama could little afford.
"The actions we have taken to stabilize our financial system, repair our credit markets, restructure auto industry and help the overall economy recover have all been steps of necessity, not choice," Obama said in prepared remarks for the announcement. "They have faced plenty of critics, some of whom argued that we should stay the course or do nothing at all. But taken together, all of these steps have brought our economy back from the brink. They are steps that are working."
Bernanke, 55, was appointed Fed chairman by President George W. Bush and sworn in Feb. 1, 2006. He had been a chairman of the President's Council of Economic Advisers and a member of the Board of Governors of the Federal Reserve System during the Bush administration.
Bernanke earned a bachelor's degree in economics in 1975 from Harvard University and a doctorate in economics in 1979 from The Massachusetts Institute of Technology. He joined Princeton University as an economics professor in 1985 and was chairman of Princeton's Economics Department from 1996-2002.