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Bernanke's reappointment

Federal Reserve Chairman Ben Bernanke has yet to take his most important test. That will come when the recovery has reached the stage where it is strong enough to support higher interest rates. Move too fast, and the Fed could ruin recovery and trigger a new recession. Move too slow and inflation could take hold as easy money once again distorts the value of assets.

Thanks to the Senate's 70-30 vote to confirm a second term for Bernanke, the world is going to find out if he's up to it.

The recent agonizing Senate fight over Bernanke's reappointment seemed like an exercise in political desperation. This was not the usual partisan fight. Republicans and Democrats joined in the game equally. They seemed spurred by Republican Scott Brown's surprise win in Massachusetts to do something, anything, to shore up their populist credentials. A vote against Bernanke was seen as a vote against bailouts to big banks.

We're glad a majority came to their senses. Utah Sen. Orrin Hatch cited two reasons for his decision to support Bernanke. One was that rejecting him would have caused market turmoil. Wall Street already saw a prelude to that last week as markets trended down in part because of uncertainties over this vote. The other reason had to do with Bernanke's replacement. That would be the choice of President Barack Obama, whose economic philosophy, the senator said, had him "terrified."

We share that sense of terror. However, we also feel much of the criticism leveled at Bernanke has been short-sighted.

History will never know what might have happened if Bernanke had not rescued certain financial firms, flooded the markets with money and slashed interest rates. We do, however, know what did happen. A free market's biggest enemy is widespread panic. The Fed managed to squelch that just as it was gaining ground.

Critics also say Bernanke helped cause the crisis by failing to see warning signs and allowing regulators to be lax. This is true, but only partially. Congress and the White House did a lot to fuel the crisis as well, pushing policies that made credit more readily available than at any time in history.

Bernanke may have to pay for his reappointment by submitting to audits and other forms of transparency. In requiring this, Congress needs to take pains to ensure the Fed remains as independent of political pressures as possible.

The real test is yet to come. Given all he has been through, Bernanke may be better qualified than anyone to meet it.