Ben Bernanke Loosens Up During His Post-Crisis Years
April 20 2018 - 08:29AM
Dow Jones News
By Ben Eisen
A decade after the financial crisis, The Wall Street Journal has
checked in on dozens of the bankers, government officials, chief
executives, hedge-fund managers and others who left a mark on that
period to find out what they are doing now. Today, we spotlight
former Fed Chairman Ben Bernanke and Iceland's ex-prime minister,
Geir Haarde.
As Federal Reserve chairman, Ben Bernanke went before a
congressional committee 10 years ago this month and grimly warned
that a recession appeared to be coming. These days, his economic
outlook is sunnier and his style is looser.
Mr. Bernanke is now with the Brookings Institution, the
Washington, D.C.-based think tank he joined after leaving the Fed
in 2014. He has swapped the dark suits favored by bankers for jeans
and a polo shirt on most days, and gets his lunch on a tray from
the cafeteria, according a colleague. The 64-year old former
central banker has a picture on his office door of a highway
interchange in South Carolina that was renamed for him, the
colleague said.
It's something of a return to his academic roots, where, among
other things, he's researching the causes of the financial crisis
that defined his Fed chairmanship. He also pens the occasional
wonky blog post and is working on policy recommendations
("Temporary price-level targeting: An alternative framework for
monetary policy").
Additionally, he's an adviser to investment firms Pacific
Investment Management Co. and Citadel LLC. He published a lengthy
memoir about the financial crisis in 2015 (Chapter 11: Fannie and
Freddie: A Long, Hot Summer).
The recession he warned of was deep, but he was more optimistic
about the economy during a recent public appearance. In Sintra,
Portugal, last year he told a room full of central bankers that the
current aging economic cycle "appears to have room to run."
Mr. Bernanke hasn't always focused on the dismal science. His
blog related watching his first baseball no-hitter. The game, he
wrote, "reminded me of one of the reasons that I like baseball so
much. No other sport provides such a detailed record of
performance."
Mr. Bernanke took the helm of the central bank in 2006, just as
a housing crisis was starting to infect the world's largest
economy. A student of the Great Depression, he had long thought
about how to manage crises. But the events of 2008 added a new
challenge: coming up with a policy response on the fly.
Mr. Bernanke oversaw the Fed's move to slash rates to near zero.
Then, the central bank went on an unprecedented bond buying spree
meant to spur the economy. The Fed's balance sheet grew about
fivefold to more than $4 trillion between when he started as
chairman and when he left, perhaps the most visible remaining sign
of what transpired.
The Fed faced all sorts of criticism -- for being slow to action
("He has no idea how bad it is out there," television personality
Jim Cramer said in 2007) and for the after-effects of its response
(Former Fed Gov. Kevin Warsh called it "reverse Robin Hood" in
2014).
Mr. Bernanke, who declined to comment for this article, has
dwelled on whether his policies exacerbated inequality. He wrote in
2015, "Whether the net effect is to increase or reduce inequality
is not clear."
He has said in interviews that he regrets not foreseeing the
crisis. He also wishes he had done a better job explaining the
Fed's actions to the public. Still, history has mostly looked
kindly upon Mr. Bernanke's work at the Fed.
"People can quibble with decisions made during the crisis, but
it seems that what the Fed did was innovative, effective, and
timely," said Phillip Swagel, who was assistant secretary for
economic policy at the Treasury Department at the time, and now
teaches at the University of Maryland.
Write to Ben Eisen at ben.eisen@wsj.com
(END) Dow Jones Newswires
April 20, 2018 09:14 ET (13:14 GMT)
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