And the Nominee Is…

Story Highlights:

• Predictably, President Obama nominated Fed Chairman Ben Bernanke for another four years Tuesday.
• Markets prefer non-news—especially when it comes to the Federal Reserve and its chairman.
• Fed chairmen are ever political animals and none are perfect. But Bernanke's done a decent job contributing to global monetary stimulus.
• An added bonus, the nomination demonstrates President Obama's tough campaign talk continues to moderate in practice.

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Fed Chairman Ben Bernanke's been making a bid to keep his job, and it appears to have paid off Tuesday as President Obama nominated him for another four years. Though his reappointment pends congressional approval, the announcement's like nominating Titanic for Best Picture—everyone knows the winner well before Oscar Night makes it official.

Bernanke's nomination is just another tidbit of non-news in traditionally news-less August. But non-news is just the kind of political porridge markets prefer (cold and bland)—especially when it comes to the Federal Reserve and its chairman. Stocks got their fill of surprising headlines last year as former Treasury Secretary Paulson seemed to supersede Chairman Bernanke. Yet with Paulson gone, despite a few tirades, Secretary Geithner's been a less commanding presence—making for a more traditional (and likely more favorable) Fed/Treasury relationship.

One benefit of President Obama's relatively early announcement is it relieves the most extreme need to please—the chairman's job is safe for four more years. Though it may seem the Fed is independent of political pressure, these super-bureaucrats are ever political animals. To keep their jobs, they must answer to the president and get congressional sign-off—a degree of political pandering is inevitable.

Politics and monetary policy don't mix well. Political considerations could underpin policy mistakes down the road. Or Bernanke may make mistakes all on his own. No Fed head is perfect, and Bernanke certainly has his critics. But in all, the chairman has kept his head above water in some rough rapids, and certainly done no worse than other developed nations' central bankers. And we've seen some apt innovation from this particular chairman—appropriately contributing to the massive wave of monetary stimulus still washing the globe.

In the short term, bureaucratic continuity should remove some market uncertainty and the risk a worse choice gets the nod. And recall, President Obama's new nominee, Bernanke, is a Republican and originally former President Bush's pick. (What happened to those promises of change?) Bernanke's nomination is another instance of President Obama's tough campaign talk proving moderate in practice—perhaps further lifting political worries that might have been a damper on stocks.