BERNANKE SET FOR SECOND TERM AS FED CHAIRMAN

       US President Barack Obama was to announce late yesterday that he had nominated Ben Bernanke to serve a second term as Federal Reserve chairman, following months of joint combat against the financial crisis.
       A White House official said on condition of anonymity that Obama was breaking his vacation on Martha's Vineyard to reappoint Bernanke to a second four-year term beginning in January.
       Obama was scheduled to deliver the statement, with Bernanke by his side, in the resort town of Oak Bluffs at 9pm Bangkok time yesterday, before US markets opened.
       White House chief of staff Rahm Emanuel told The Wall Street Journal that Obama was reappointing Bernanke because he credits him with "pulling the economy back from the brink of depression".
       Bernanke was selected as Federal Reserve chairman by Obama's predecessor, George W Bush, in 2005 to replace retiring Fed chairman Alan Greenspan, who served for 18 years and presided over a golden era of economic prosperity.
       At the tail end of Bush's second term and the beginning of Obama's presidency, Bernanke has been a key player in stabilising markets and presceibing the antidote to the worst crisis since the Great Depression of the 1930s.
       He has enjoyed broad support on Wall Street, for the sweeping and sometimes unorthodox methods he has used to save the banking sector, redefine the financial industry and keep the recession from turning into a depression.
       But Obama may face some opposition in Congress to his decision to reappoint him.
       US Senate Banking Committee chairman Chris Dodd vowed to hold a "through and comprehensive confirmation hearing" for Bernanke's renomination, which requires Senate confirmation.
       "I still have serious concerns about the Federal Reserve's failure to protect consumers and I strongly believe these responsibilities should go to an independent consumer financial protection agency," Dodd said in a statement, while noting that Obama's decision was "probably the right choice".
       Obama's move may be calculated to send a signal of continuity and to reassure financial markets that are still fragile, despite signs the global economy is returning slowly to growth, especially outside the United States.
       Changing the Fed chairman at such a time might have spooked investors and been seen as a dramatic reversal of policy, considering Bernanke was such a key player in fighting off the crisis.
       Bernanke, 55, has worked closely with the Treasury Department and the White House in plotting a route out of the recession and stabilising and reforming the debt-laden US financial sector.
       He now faces the delicate decision of how quickly to scale back the massive government effort to pump liquidity into the financial system.
       Bernanke, meanwhile, said just last week that appeared good despite financial market strains, but cautioned that any economic growth would be slow at first.
       "After contracting sharply over the past year, economic activity appears to be levelling out, both in the United States and abroad, and the prospects for a return to growth in the near term appear good," he told central bankers at a meeting in Jackson Hole, Wyoming.
       Bernanke famously railed against the spectre of deflation, which he saw as one of the factors which prolonged the Great Depression, and that view has informed his thinking on the financial crisis that has battered the US economy during his moment in the spotlight of history.