Bernanke: Ivy League intellect, Fed experience

“The Fed needs an approach that consolidates the gains of the Greenspan years and ensures that those successful policies will continue — even if future Fed chairmen are less skillful or less committed to price stability than Mr. Greenspan has been,” Bernanke wrote along with Frederic S. Mishkin and Adam S. Posen.

Bernanke also has advocated more open Fed communication and succeeded in moving the central bank forward on that front while there.

Bernanke, who chaired the economics department at Princeton University before joining the Fed board, caught financial market attention when he voiced concern over deflation risks in late 2002 and laid out a number of unusual options the Fed could use to combat that threat.

While many inflation-targeting proponents are viewed as inflation “hawks,” Bernanke’s focus on the dangers of deflation while at the Fed makes him tough to pigeonhole, analysts said.

“He’s eminently reasonable. He’ll react to the situation, but he’ll maintain a long-term focus on price stability,” said Mark Gertler, chairman of the economics department at New York University and a longtime Bernanke associate.

Bernanke also supports the use of forward-looking language in the central bank’s announcements on interest rate policy. He has said this would improve the effectiveness of policy by influencing the long-term interest borrowing costs the Fed does not directly control.

“To the extent that central bank talk provides useful guidance to markets about the likely future path of short-term interest rates, policy-makers will exert greater influence over the longer-term interest rates,” Bernanke said a year ago.

Earlier this year, Bernanke said a “glut” of foreign saving lay behind the record gap in the U.S. current account, an argument that quickly became touchstone in a debate among economists over global economic imbalances.

In the same vein, he expressed optimism that global trade and investment imbalances could be resolved without crisis. Like Greenspan, he believes the Fed is better off focusing on the broad economy than trying to sway asset prices even in the face of building bubbles, and has voiced support for efforts to toughen regulation of mortgage-market giants Fannie Mae and Freddie Mac.

In addition, he has said the Fed should allow banks to fail, except when the wider financial system is in peril.

Bernanke, who was born Dec. 13, 1953, is married with two children.

Bernanke co-authored a popular economics textbook and chaired the panel charged with dating U.S. economic expansions and recessions at the prestigious National Bureau of Economic Research. He taught at Stanford University before joining Princeton’s faculty.

MORE FROM AFTER GREENSPAN

After Greenspan Section Front

Greenspan in memoir talks with NY publishers Bernanke sworn in as 14th Fed chief Fed hikes rates as Greenspan ends term Greenspan's parting gift: his chair Bernanke prepared to put stamp on Fed Bernanke's first goal: gaining credibility What does Greenspan leave behind? Greenspan's legacy: uncommon insight Greenspan to set up consulting firm Greenspan: $100,000 man? After Greenspan Section Front   Add After Greenspan headlines to your news reader: