Ben Bernanke, an economist known for intellectual curiosity, posed a question in The Wall Street Journal five years ago: "What Happens When...
WASHINGTON — Ben Bernanke, an economist known for intellectual curiosity, posed a question in The Wall Street Journal five years ago: “What Happens When Greenspan is Gone?”
President Bush gave his answer Monday: He will replace retiring Federal Reserve Chairman Alan Greenspan with Bernanke.
Bernanke, 51, is an Ivy League-trained academic, a former member of the Federal Reserve’s Board of Governors and the chairman of the president’s Council of Economic Advisers since June.
“Ben Bernanke is the right man to build on the record Alan Greenspan has established,” Bush said from the Oval Office, summing up a résumé of scholarly achievements, written accomplishments and academic pursuits.
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The president mentioned Bernanke’s speeches — “widely admired for their keen insight and clear, simple language.”
In other words, he doesn’t talk like Greenspan.
While “irrational exuberance” and the housing market’s “signs of froth” were Greenspan’s calling cards — language that left economists and the public parsing his words — Bernanke favors plain terminology.
A believer in keeping inflation at around 2 percent, Bernanke has reached into children’s literature to embrace a “Goldilocks” theory — not too hot, not too cold.
At the confirmation hearing for his previous Fed job in July 2002, Bernanke told the Senate Banking Committee, “Saturation coverage by cable-TV networks notwithstanding, the stock market is not the whole economy.”
Bernanke’s approach extends from the world of monetary policy to the local school board. The father of two served two terms as a member of the Montgomery Township Board of Education in New Jersey, not far from Princeton University, where he was an economics professor and department chairman.
“He was very good at seeing the big picture and being able to translate a difficult concept into plain English,” said Laurie Navin, who served on the school board with Bernanke for six years.
“When you’re talking about long-term costs of a contract and, you know, people would be worried about 50 cents, and he would be able to explain whether that mattered or not in the long term.”
Friends describe an unassuming man of wry humor.
After interviewing at the White House for the post on the Fed board, Bernanke sent an e-mail to Navin and other former school-board members describing his experience.
“He was so excited … he said, ‘I interviewed with Dick Cheney and George Bush in the Oval Office and they were asking me all these questions and they asked if I had ever served in an elected position, and I said, “It may mean nothing here, but I served on my local school board.” And Bush said, “It’s good enough for me; you’re in,’ ” according to Navin.
Jamie Savedoff, who also served on the school board, described Bernanke as a “very evenhanded, calm, collected, rational person.”
Mark Gertler, chairman of the economics department at New York University, has known Bernanke for 20 years. He said Bernanke once wore tan socks with a dark suit to a meeting with Bush administration officials.
“He’s a much better dresser now,” Gertler said.
Born in Georgia and raised in Dillon, S.C., Bernanke was an academic star. In sixth grade, he won the state spelling bee but missed higher acclaim when he faltered on the word “edelweiss.”
He earned a score of 1,590 on his SAT out of a possible 1,600, taught himself calculus in high school and then focused on economic numbers at Harvard.
Bernanke graduated summa cum laude in 1975. His senior honors thesis — a 102-page paper, “An Integrated Model for Energy Policy, ” won the prize for the economics undergraduate student who submits a work of the highest caliber.
He received his doctorate in economics from the Massachusetts Institute of Technology. His focus during his years in Boston were the underpinnings of the Great Depression; his obsession was the city’s beloved baseball team, the Red Sox.
A Washington, D.C., denizen of late, Bernanke recently switched his allegiance to the capital’s new baseball team, the Nationals.
Richard Yamarone, chief economist at Argus Research in New York, praised Bernanke’s intelligence and abilities but questioned the wisdom of picking an academic with no Wall Street experience to run the central bank.
“I don’t know if we’re going to come up with another maestro,” Yamarone said, referring to Greenspan. “We’re more in line to get a college music professor.”
Friends say Bernanke eschews ideology. In answers to the Senate questionnaire for the Fed job, Bernanke said he was registered Republican but had made no political contributions of more than $500.
In his Wall Street Journal op-ed piece, Bernanke considered economic life after Greenspan.
“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,” he wrote along with Frederic Mishkin and Adam Posen.
Associated Press reporters Rosa Cirianni in New Jersey and Denise Lavoie in Boston contributed to this report.