Federal Reserve chief Ben Bernanke's nomination for a second term running the world's most powerful central bank faces a decisive day in the Senate on Thursday when his confirmation vote looks set to go ahead.
Bernanke had been widely seen as getting the support he needs but a recent surge of public anger at big banks and the way U.S. regulators rescued them from the financial crisis has meant the vote could be a lot closer than expected.
Praised by economists and investors for the Federal Reserve's unprecedented response to the financial crisis, Bernanke has not escaped criticism for failing to see the crisis as it brewed.
President Barack Obama and allies in the Senate Democratic leadership were forced to intervene over the past week to press senators to get the 60 vote super-majority needed to overcome efforts to block the nomination of Bernanke.
Polls show that majority now looks likely.
The political neutral and independent Fed has really been politicized this week, probably to its detriment, said Chris Krueger of Concept Capital, a private firm that tracks Washington for institutional investors.
A procedural vote has been set for Thursday to clear any roadblocks, a sign that Senate leaders feel they have the 60 votes needed.
Clearing the hurdle would start the clock on up to 30 hours of debate on the nomination, although Senate aides said on Wednesday they expected the final confirmation vote would take place on Thursday.
Bernanke's term expires on January 31.
The election last week of a Republican to a Massachusetts U.S. Senate seat long held by Democrats underscored the anger among voters over Wall Street bank bailouts, in part designed by Bernanke, and the weak economy.
The result shocked Washington. A number of senators facing tough re-election battles in November voiced their opposition, raising doubts about whether Bernanke could be confirmed, which sent global stock markets lower.
President Obama contacted senators over the weekend and Bernanke now looks set to be confirmed, officials say.
However, he may garner the fewest yes votes for any nominee to be Fed chairman in the 32 years that the Senate has been playing a role in approving the nominations.
Paul Volcker, who triggered a back-to-back recession with sky-high interest rates in order to kill inflation, currently holds that honor with 16 no votes in 1983.
POLL SHOWS SUPPORT FOR BERNANKE
A Reuters poll showed 50 Senators support Bernanke and 21 oppose him. The rest of the 100-member chamber is undecided or undeclared.
If confirmed, Bernanke will lead a Federal Reserve that has been reshaped by financial crisis, a recession and the shifting politics that ensued.
His biggest task in coming months will be to decide when and how to eventually dismantle or exit emergency measures that he helped put in place, without stunting the fragile economic recovery or alarming financial markets.
In another sign of how public outrage over the recession and expensive bank bailouts is dominating Washington ahead of November's mid-term elections, Treasury Secretary Timothy Geithner was lambasted by lawmakers on Wednesday over the 2008 public bailout of insurer American International Group.
That anger could translate into new moves in Congress to strip the Fed of its direct supervisory power over banks or its responsibility for protecting consumers.
Congress might also mandate much more extensive supervision of the Fed including its emergency lending and possibly even monetary policy decisions.
In considering Bernanke's nomination, some lawmakers pressed him to do more for the economy, highlighting the unusually high degree of political pressure now on the Fed.
The Fed guards its independence jealously and is more likely to respond to the political mood by pushing forward on consumer-friendly regulatory initiatives than by steering monetary policy in a direction palatable to lawmakers.
Ethan Siegal of The Washington Exchange -- a private firm that tracks Congress and the White House for institutional investors -- said he expects Bernanke to steer his own path.
I think Bernanke is going to be under a lot of pressure from the liberal and populist side of the Congress to keep (interest) rates low and not to withdraw any of the help that the Fed provided the economy, Siegal said.
But I think Bernanke is going to do what he thinks is the best thing for the overall economy.
At a policy meeting that ended on Wednesday, the Fed renewed its pledge to hold benchmark interest rates at exceptionally low levels for a long time to support a fragile recovery.
With unemployment in the double digits, the Fed will face increasingly difficult decisions later in the year about when to raise interest rates as the recovery gains steam..