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At first I was not going to comment on the re-appointment of Ben Bernanke to the position of Chairman of the Board of Governors of the Federal Reserve System. I thought I had had my say. (See my post “Exit Strategy: An Argument Against Bernanke's Reappointment” of July 27, 2009.) Guess this was not to be. Since that post was re-posted on several sites yesterday and people have asked me to comment on the news, I decided to provide a current comment on the situation.

There are seemingly two reasons given for the re-appointment of Ben Bernanke to another term as the Chairman of the Board of Governors. The first is that he was calm throughout the crisis. The second is that his appointment, since he is a “known”, will calm the financial markets.

Calm is “good”! I have just been writing about it: see Banking Sector Stays Quiet on August 10 and The Deleveraging Continues: What This Means on August 24. It is good that the financial markets are calm and everyone is on vacation this last week in August: a great time to make a very important appointment.

But, is “calm” what we need? The financial markets do get over changes in leadership. For example, we change Presidents and the markets get over the change. In fact, changing leadership in a time of calm is the best time to change leadership!

And, what does it mean that Bernanke was “calm” during the financial crisis? Why do I keep remembering management team after management team, taking their banks public during the Savings and Loan crisis, that kept telling us: “Yes, we got the bank into this mess but we learned our lesson. Now, all you have to do is give us another $100 million in new capital and we will change our ways!” That was the last the investors saw of their $100 million. But, these managements were calm as their institutions crumbled.

Bernanke was one of the leaders that got us into this mess. He got us through the crisis? I have over my desk the cartoon from the Financial Times showing Bernanke in front of the Federal Reserve building with two revolvers in his hands shooting off lots and lots of currency. The title of the cartoon: “A Fistful of Dollars”. He is not known as “Helicopter Ben” for nothing.

His policy for the crisis: throw as much money into the market as possible. It is way better to have too much money out there than to not have enough. A good, coherent, concise policy!

And, he did this very calmly!

Or did he? See my post of November 16, 2008: The Bailout Plan: Did Bernanke Panic?

My final concern over this re-appointment is my disappointment with President Obama. I had hopes that he would bring a whole new quality of leadership to Washington, D. C. He has been President for over six months now and I must say that hope has not been fulfilled.

Source: Bernanke's Disappointing Reappointment