U.S. lawmakers looked likely to grudgingly approve Ben Bernanke to a second term as Federal Reserve chairman this week after the White House stepped in to defend his crisis-fighting record and rally votes.

A Reuters poll of senators showed 31 were either committed to approving the nomination or leaning that way, while 17 were outright opposed or inclined that way. Senate leaders need to secure a super-majority of 60 votes in the 100-member chamber to overcome efforts by some senators to block the nomination.

Senate Majority Leader Harry Reid expects a confirmation vote by the end of this week, and hopes to have enough to support reappointment, his spokesman said on Monday.

The needed votes had seemed assured until last week when a handful of lawmakers, including two Senate Democrats on Friday, said they would not support Bernanke because of anger over his handling of Wall Street bailouts. Republican Senator John McCain also plans to oppose the nomination, an aide said on Monday.

The uncertainty sent stock markets down sharply on Friday, although they recovered some losses on Monday as Bernanke's approval looked more certain.

Bernanke's first four-year term as chairman expires on Sunday. If he is not confirmed in time, the Fed's vice chairman, Donald Kohn, is poised to take over on an acting basis.

For investors, Bernanke is a known entity who is committed to keeping short-term interest rates low until the economy strengthens. They see the fight for Bernanke's reappointment as a worrisome sign of politics interfering with monetary policy.

The U.S. central bank is facing more political scrutiny as backlash over the financial crisis and ensuing government bailouts has grown. The House of Representatives last month approved a measure that would give Congress authority to audit the Fed's interest rate decisions, the very heart of the central bank's monetary policy.

The low interest rates, along with the government's various bailout efforts, have helped banks reap large profits. Many of those firms rewarded bankers with fat bonuses, infuriating voters who see that as evidence of an economic policy that assists Wall Street -- at taxpayers' expense -- without doing enough to bring down the country's stubbornly high jobless rate, currently at an almost 26-year high at 10 percent.

President Barack Obama contacted the Democratic Senate leadership on Saturday and the White House dispatched advisers to the Sunday talk shows to muster support.

Max Baucus, chairman of the Senate Finance Committee and a Montana Democrat, said he supported Bernanke because his decisions brought us back from the brink of economic disaster.

BANKERS' EYES

When the Senate takes up the nomination, Bernanke is likely to receive another round scathing criticism from lawmakers keen to show they are sensitive to voter outrage.

Most members of Congress face reelection this November.

That anger was on full display last week when voters handed Democrats an embarrassing defeat in a special Senate election in Massachusetts, which had been a Democratic stronghold for decades. That left Obama's party one vote short of the 60 needed to clear Republican legislative roadblocks.

Obama has responded by taking a tougher tone with Wall Street and stepping up his commitment to create jobs and help households. On Monday, he proposed a package of new initiatives aimed at helping middle-class families.

Richard Durbin, the Senate's assistant majority leader, was scheduled to meet with Bernanke later on Monday to discuss concerns about Fed policy, according to an aide.

Nobel laureate economist Paul Krugman -- whom Bernanke hired for Princeton University's economics department before going to the Fed -- said Bernanke deserved criticism for being too complacent before the financial crisis and for not doing enough now to combat high unemployment.

My sense is that Mr. Bernanke, like so many people who work closely with the financial sector, has ended up seeing the world through bankers' eyes, Krugman wrote in his column in The New York Times.

Krugman, however, said Bernanke ought to be reappointed because any good alternative for the position would face a bruising fight in the Senate. And choosing a bad alternative would have truly dire consequences for the economy.

Bernanke, who was appointed by former President George W. Bush to succeed Alan Greenspan as Fed chairman in 2006, has received widespread praise for his response to the financial upheaval, which began with failing U.S. mortgage loans but rapidly expanded into a global credit crisis.

He improvised on the fly to come up with special lending programs that many economists think helped prevent the recession from becoming a depression.

White House adviser David Axelrod said on Sunday that Bernanke had been a very steady hand in this crisis and had helped stabilize the economy.

But Bernanke has also been blamed for missing the warning signs of a dangerous bubble forming in the housing market, and underestimating its power to wreak havoc on the economy.

Senator Bernie Sanders, an Independent who usually votes with Democrats, has been a vocal opponent of Bernanke's appointment and said his failings before and after the crisis should be enough to disqualify him.

Instead of confirming one of the key architects of George Bush's economic agenda, a new nominee could transform the Fed into a central bank committed to the needs of the middle class of this country rather than powerful Wall Street executives responsible for the worst economic crisis since the Great Depression, he said.

(Editing by Leslie Adler)

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