Senate Support for Bernanke Suddenly Shaky

Dissatisfaction with Bernanke on Capitol Hill could increase Wednesday as the House Government Oversight Committee holds a hearing examining the Federal Reserve's bailout of AIG. Treasury Secretary Tim Geithner who led the Federal Reserve Bank of New York at the time will testify.

Earlier this week, Bernanke tried to defuse rising anger over the handling of AIG -- one of the few issues that unites both Democrats and Republicans -- by calling on the General Accounting Office to review the actions of the Federal Reserve. Bernanke himself will not be testifying as he will be busy at the Federal Reserve that day, as it announces its decision on interest rates.

With the administration now looking to play the populist card and pick a fight with Wall Street, if Bernanke loses his renomination vote or withdraws, he would be one of first casualties in the election of Scott Brown in Massachusetts.

Members of Congress "are frustrated and anxious and looking to lay blame on someone, and right now he is the easiest one to take out blame on," said Brian Gardner, a political analyst with banking firm Keefe Bruyette & Woods.

With no possible chairman waiting in the wings to be nominated, the market reaction would be, "horrible" said Josh Rosner, a managing director at investment advisor Graham & Fisher.

"It raises questions in investors' minds about the direction of the country," said Garner, "and investors want clarity."

"Senators view the Massachusetts vote as a backlash against incumbents, and they don't see why that should be limited to elected officials," said Lou Crandall, chief economist at Wrightson ICAP

Bernanke's term ends Jan. 31. The clock is ticking.

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