It could have been Bill Clinton or George W. stumping for votes.
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But there he was fielding questions, cracking jokes and kissing babies.
In a continuation of his campaign for greater openness at the Fed, and perhaps to hold onto his job as the top chef of the nation’s economy, Ben Bernanke held a town hall- style meeting in Kansas City, Mo.
Where his predecessor Alan Greenspan was known for his detached technocracy and opaque language, Bernanke has tried to bring a new level of transparency and humanity to his stint as Fed Chair.
Under Greenspan, the Fed was an aloof, secretive temple of economics. In contrast, Bernanke has presided over a seemingly new regime of candor and accessibility.
Several months ago, the former Stanford and Princeton economics professor appeared on “60 Minutes” where he even took the interviewers on a tour of his hometown, the tiny, rural hamlet of Dillon, S.C.
The Bailout and Personal Pain
After taking a pounding this past week in Congress over his handling of the economic crisis and multi-billion-dollar bailout of the nation’s largest financial firms, Bernanke appears eager to sell his actions to middle-America.
With PBS’s Jim Lehrer moderating, Bernanke fielded questions from the audience challenging his controversial decision to prop up the big banks at the expense of the American taxpayer.
During the hour-long q-and-a, Bernanke told the audience of 190 that “I had to hold my nose” when he took action to keep companies like AIG and Bear Stearns from collapsing. He tried to assure his questioners that “nothing made me more angry than having to intervene, particularly in a few cases where companies took wild bets.”
Bernanke went on to tell the town hall participants that he was “disgusted,” but that he wasn’t going to be the Fed Chair that presided on the second Great Depression.
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A renowned scholar of the Great Depression, Bernanke, in Zen-like fashion, justified his actions by explaining that when “an elephant falls, the grass beneath it is crushed.”
While most Fed watchers agree that Bernanke inherited an economy that was already overheated by lax interest and monetary policies, he has been taking flak for his failure to act more quickly when the first signs of the recession took root.
Heat from Conservatives
Even though Bernanke was appointed by George W. Bush, a Republican, the sharpest criticism of his tenure has come from the right.
Ron Paul, Texas Congressman and former Presidential candidate, has charged that Bernanke, “in collaboration with the giant banks, has created the greatest financial crisis the world has ever seen.” Other Republican lawmakers have portrayed Bernanke as the embodiment of “heavy-handed” big government.
Paul is sponsoring a bill that would authorize an unprecedented audit of the Fed’s monetary decisions. So far, more than 250 lawmakers have said they would support the measure.
Surprisingly, Bernanke has found his staunchest supporters coming from the left side of the political aisle, including the President. In a backhanded defense of the Chairman’s actions, Massachusetts Representative Barney Frank recently said, “When you have a terrible mess, it is unlikely that those who try to alleviate the danger of that mess will come out looking clean.”
In reality, it’s difficult to determine whether Bernanke’s candidness is a stylistic shift or a carefully crafted campaign to secure another four years at the helm of the Fed. Bernanke’s term is up in January. The President has been under mounting pressure to find a replacement.
For his part, the President has been steadfast in his continued support for Bernanke. Although the administration’s financial overhaul plans would strip the Fed of its current authority to regulate mortgages and other forms of consumer lending, including credit cards, the President has said that he favors giving the central bank sweeping powers that would permit it to assert tighter control over financial institutions deemed “too big to fail.”
If push comes to shove, most agree that Bernanke will be reconfirmed for another four years as Chairman. Despite being caught in a political crossfire, there is no credible replacement on the horizon. Moreover, if the economy still is in the midst of its recession, most lawmakers probably will be reluctant to change horses.
At this point, Bernanke apparently is taking nothing for granted.
Who knows? The next time we see him, Ben Bernanke may be dealing the first hand at the upcoming World Series of Poker.
John Cohn is a senior partner in the Globe West Financial Group, based in West Los Angeles. He may be contacted at www.globewestfinancial.com
