Bernanke The Politician
Something strange is going on. The Chairman of the Federal Reserve is trying to strike a chord with regular people. Ben Bernanke is taking a different approach to the role of Fed chief and trying to do some damage control at a time when the general public suddenly cares about what the Fed is doing. I'm not sure how I feel about this.
Here are a few of Bernanke's latest efforts, according to the New York Times:
He has given a television interview to "60 Minutes" on CBS, including a tour of his hometown, Dillon, S.C.; held what amounted to a televised news conference; and written newspaper commentaries to explain the Fed's efforts to fight the financial crisis.
On Sunday, Mr. Bernanke reached another milestone in his evolution from Fed chairman to Fed showman, participating in a one-hour town hall-style forum here organized and moderated by Jim Lehrer of "The NewsHour" on PBS.
That town hall-style forum was not in Manhattan or Washington -- it was in Kansas City, Missouri. Bernanke is venturing far from his comfort zone to try to get people comfortable with the Federal Reserve. In doing so, however, Bernanke appears to be acting more like a politician than banker -- a sharp strategic shift from the usual behavior of Fed chairmen.
On one hand, I think Bernanke is right to be getting the Fed's message out. After all, who better to try to explain what the Federal Reserve does than its chairman? If he is just taking these steps so that the public is better educated on monetary policy, then that's perfectly legitimate, and even admirable.
But that seems a little naïve. I worry that he has an ulterior motive. He may be responding to Congress' efforts, led by Ron Paul, to attempt to bring greater transparency to the Fed. Bernanke may be trying to quell public anger at the Fed's opaque nature so that it can retain secretive tactics and not really have to answer to anyone. He could be attempting to make nice so voters call off their dogs and let the Fed function as it always has.
I also wonder if a part of his motivation might be a job retention effort. After all, going out and listening to the people is practically his boss' calling card. President Obama will soon be deciding whether to keep Bernanke, a Bush appointee, or to replace him with someone closer to his politics. Going to the South and Midwest to talk to real people might impress Obama and lead him to think twice about replacing Bernanke: he's acting like one of the team.
Whatever his motive, whether honorable or questionable, there's one characteristic all of these possibilities have in common: they show how smart Bernanke is. To do his job well, he needs people to trust him, including the public, Congress and the President. I would just be a little more comfortable if he did not have to act so much like a politician in order to accomplish that goal.