Wall Street may be behind President Obama's decision to nominate Fed Chairman Ben Bernanke for a second term, but the central bank boss is likely to face plenty of criticism at his Senate confirmation hearing.
For all of the talk of Bernanke being slow to react to the financial crisis with a too-little-too-late style, some think he has now done too much, overextending the Fed's powers and undermining its independence.
Senate Banking Chairman Chris Dodd (D-Conn.) who's facing a tough re-election bid this fall, was among the first to comment, offering tepid support for Bernanke in an otherwise skeptical statement about the chairman and the central bank.
"There will be a thorough and comprehensive confirmation hearing," Dodd said. "I expect many serious questions will be raised about the role of the Federal Reserve moving forward and what authorities it should and should not have."
Though somewhat surprising, the President's timing may hardly be serendipitous, especially since the White House told the press corps over the weekend not to expect any news while the first family was on vacation in Martha's Vineyard.
Congress, the home of much criticism, is in recess, and critics of Bernanke and the Fed are scattered around the country, far a field of Washington's center stage.
The President's commitment to Bernanke surprised some analysts, who either thought he would appoint an openly Democratic individual—White House adviser and former Treasury Secretary Lawrence Summers was thought to be waiting in the wings—or accommodate Bernanke critics in the Democratic party.
"Experience trumped politics in this apparent renomination, as there were many Democrats calling for change," said Chris Rupkey, economist at Bak of Tokyo-Mitsubishi, in applauding the president's decision.
Also interesting is that Obama's announcement comes just weeks after the Fed chairman and the central bank took a rare bipartisan political beating over the White House's proposals to give the Fed sweeping new powers in its regulatory reform plan.
That in turn relit the debate over the central bank's supervision of bank holding companies and extraordinary policy responses in bailing out troubled financial firms and reflating the economy beyond the use of basic monetary policy tools.
Not only did Congressional critics question the Fed's political independence from the executive branch, they deemed the central bank's unusual and enormous lending programs as a challenge to the spending power reserved for the legislature under the Constitution.
Much of that is likely to resurface at Bernanke's confirmation hearing, which has yet to be set.
"You have a lot of guys who are professional Fed critics who'll have a great opportunity [with the nomination hearing]," said Bill Frenzel, a 10-term Republican Congressman now with the Brookings Institution.
The regulatory reform plan penned by Republicans in Congress would narrow, not expand, the Fed's responsibilities, transfer much of its balance sheet activity to the Treasury Department and impose regular audits by the General Accountability Office.
Wariness about the Fed—and by association, Bernanke—has become fairly common in the GOP in the last year and is unlikely to fade anytime soon.
"I'd think long and hard about reappointing him," said Minnesota Governor Tim Pawlenty, who is thought to be considering a run for the presidency in 2012.
It would be easy to dismiss Republicans on some of the Fed issues, were it not that Democrats at various points of the party spectrum share some of that thinking.
The Federal Reserve Sunshine Act of 2009 introduced by Ron Paul (R-Texas) and Senator Bernie Sanders (I-Vt.), which would also audit the central bank, has garnered dozens of supporters on both sides of the political aisle.
"I think they will try to make political hay of it," adds Frenzel, "At the same time, with the president's sponsorship and the major Democrats wanting to follow the president, I think Bernanke will coast."
As reaction tickled out in the hours after the president's news conference, that forecast appeared well founded.
House Financial Services Chairman Barney Frank issued a statement that was as much a vote of confidence in the president as the Fed chairman.
Frank, who has his own issues with the Fed's powers, said, "I strongly support President Obama's nomination of Ben Bernanke," adding that the Fed chairman's response to the crisis "has been wise and appropriate."
Republican Senator Bob Corker, another member of the Banking committee, was certainly more measured but may have summed up the obvious for both critics and supporters, saying Bernanke "hadn't made all the right calls," but had "earned the right to see this through and lead the Fed but lead the Federal Reserve through these volatile times."