U.S. Senate sets hearing on Bernanke's renomination

By Mark Felsenthal

WASHINGTON (Reuters) - The Senate Banking Committee said on Friday it will hold a hearing on Federal Reserve Chairman Ben Bernanke's renomination to a second term on Dec. 3, putting the central bank chief under scrutiny at a time when the Fed is facing intense criticism in Congress.

President Barack Obama nominated Bernanke to a second four-year stint as Fed chief in August, praising his handling of the financial crisis. Bernanke's first term expires on Jan. 31.

The hearing promises to be lively.

Lawmakers have accused the Fed of being asleep at the wheel as risky lending practices laid the groundwork for the financial bust, which in turn fed the most painful recession since the 1930s. They are also angered at the role the central bank has played in bailing out large financial institutions.

Public resentment against the Fed and the Treasury Department runs high as some banks that received taxpayer funds have returned to profitability even as many Americans still lose jobs and homes.

Some lawmakers are pushing legislation to sharply rein in the Fed's powers and to subject it to a higher degree of congressional scrutiny.

An amendment approved by a House of Representatives panel on Thursday would open Fed interest rate decisions to congressional review. Fed officials say the step would sap investor confidence in the central bank's ability to take the potentially unpopular step of raising interest rates to put the brakes on growth to prevent inflation.

Senior Senators of both political parties have faulted the Fed's actions leading up to and during the crisis. Banking Committee Chairman Christopher Dodd called the Fed's regulatory performance "an abysmal failure."