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Fed's Ben Bernanke wins committee approval, but tougher road ahead

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Pablo Martinez Monsivais/AP

(Read caption) Christopher Dodd (left), chairman of the Senate Banking Committee, conferred with ranking member Sen. Richard Shelby during Thursday's session, where the committee voted 16 to 7 to give Ben Bernanke a second term as chairman of the Federal Reserve. Senator Shelby opposed the nomination.

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Ben Bernanke's road to a second term as chairman of the Federal Reserve has gotten a little trickier.

On Thursday, the Senate Banking Committee voted 16 to 7 to approve Mr. Bernanke's nomination. While that vote moves the nomination to the full Senate, it also represents the most "no" votes a Fed chairman's nomination has received in at least three decades.

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If history is any guide, the vote in the full Senate will be even more contentious.

Since 1979, the Fed chairman receiving the most "no" votes from the Senate was Paul Volcker's renomination in 1983. At the time, he had stoked controversy with a tough policy of raising interest rates that pushed the economy deep into recession but managed to wring inflation out of the US economy. He sailed through the banking committee with only two "no" votes and won Senate confirmation 84 to 16.

The other contentious nomination process was Alan Greenspan's in 1996. Trying to win a third term, he cleared the committee on a unanimous vote, but saw his Senate confirmation held up three months because Sen. Tom Harkin (D) of Iowa pushed for and ultimately got a Senate debate on Mr. Greenspan's policies. Eventually, the chairman won a third term on a 91-to-7 vote.

The lesson here, of course, is that in difficult times Fed chairmen don't usually win popularity contests. In some ways, Bernanke's difficult nomination reflects the current concerns over the worst economic downturn in decades.

"Our trust and confidence were misplaced," said Sen. Richard Shelby of Alabama, the committee's ranking member and one of six Republicans to vote against Bernanke. Jeff Merkley (D) of Oregon also voted "no." Reasons ranged from the chairman's slowness in realizing the depth of the financial crisis to changes made in the use of government bank-rescue funds.

The opposition in committee doesn't bode well for a smooth nomination in the full Senate.

If Mr. Volcker got 16 "no" votes after only two naysayers in committee and Mr. Greenspan earned 7 no votes after unanimous approval in committee, what lies ahead for Bernanke?

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An even more contentious path to approval. Already, Sen. Bernard Sanders (I) of Vermont has put a "hold" on Bernanke's nomination. If it stays in place, it means he would have to get 60 Senate votes to win.

(And all because the market crashed on him.)