Taking over in February 2006 after being appointed by Bush, Bernanke succeeded Alan Greenspan, the legendary 18-year Fed chief who served under president Ronald Reagan, George Bush, Bill Clinton and George W. Bush.

Some have questioned why Bernanke did not sound more alarm bells in his early years at the Fed's helm. US housing prices began sliding in mid-2006, precipitating a crescendo of mortgage defaults that eventually pushed Wall Street firms to the brink.

Bernanke 'argued for keeping interest rates low as the housing bubble developed', said Simon Johnson, a former chief economist of the International Monetary Fund.

'Bernanke was part of the Greenspan Illusion -- the Fed should ignore bubbles and 'just clean up afterwards',' Johnson said.

Christopher Dodd, the Democratic chairman of the Senate Banking Committee who will preside over confirmation hearings, offered only a lukewarm endorsement of Bernanke's re-appointment.

'I think re-appointing Chairman Bernanke is probably the right choice,' Dodd said. 'Bernanke was too slow to act during the early stages of the foreclosure crisis, but he ultimately demonstrated effective leadership, and his re-appointment sends the right signal to the markets.'

The Fed's 'exit strategy' is likely to dominate the start of Bernanke's second term, as the US economy is likely to pull out of recession in the coming months.

Bernanke will be selling Obama's plans for a major overhaul of financial regulation to prevent a similar crisis in future. The reforms could see the central bank get new powers to oversee the country's top banks.

In keeping Bernanke, Obama maintained a tradition of bipartisanship for Fed appointees that is otherwise rare in Washington politics.

Greenspan was picked by George H.W. Bush and re-appointed by Democratic president Bill Clinton. Democrat Jimmy Carter's choice to head the central bank, Paul Volcker, was reappointed by his Republican successor, Reagan.