Ben Bernanke's nomination to replace Federal Reserve Board Chairman Alan Greenspan is more than a passing of the torch amid Washington power...

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DALLAS — Ben Bernanke’s nomination to replace Federal Reserve Board Chairman Alan Greenspan is more than a passing of the torch amid Washington power corridors.


For Americans who own homes and 401(k) retirement plans, use a credit card or buy imported goods, the Fed chief influences some of the most personal aspects of their financial lives.


“When the Federal Reserve acts, average Americans react,” said James Galbraith, an economist at the Lyndon B. Johnson School of Public Affairs at the University of Texas, Austin.


“When rates go down, people refinance their homes, they go out and buy cars,” he added. “It’s a position which can have an enormous impact on people’s lives.”


That has never been truer than today, an era when greater numbers of Americans rely on a wide array of credit through mortgages, credit cards and business loans.


Record low interest rates in recent years have brought into the capital markets groups that previously were for the most part shut out.


So, a vote at the bank’s Federal Open Markets Committee trickles down — to Wall Street and Main Street — encouraging entrepreneurs to form businesses and hire employees.


With inflation low, consumers get more bang for their buck — an increasingly important detail since their spending accounts for two-thirds of economic activity.


And there are spillover effects not usually associated with central bankers: a healthier economy and prosperous society.


A strong U.S. economy fuels growth throughout the world as well. Beyond monetary policy, the chairman can also influence banking regulation and check processing.


A group of consumer organizations Monday called upon Senate Banking committee members in upcoming confirmation hearings to ask Bernanke about check holds, unfair mortgage practices and a variety of other issues.


“These are the things that affect Main Street as well as Wall Street,” said Gail Hillebrand, senior attorney with Consumers Union. “This is, ‘When does my paycheck clear?’ “


Should Bernanke be confirmed, he steps into a much more public role than was envisioned when the Federal Reserve System was created in 1913.


In his nearly 18 years at the helm, Greenspan has presided over an increasingly transparent central bank. The Fed began publicly releasing its FOMC meeting minutes.


Twice-yearly meetings on Capitol Hill brew up a media frenzy, as legislators and everyday Americans alike try to parse Greenspan’s words, searching for clues to monetary policy.


“They’ve become a major forum for a discussion of economic policy, almost as important as the budget,” said Galbraith.


The Fed’s increasingly public role has “improved the quality of the discussions, raised the standard of the people who get appointed to the board,” he added.


Greenspan defined an unprecedented time of prosperity in U.S. economic history — one that couldn’t, and didn’t, last.


Quotable catch-phrase aside, the tech wreck that would ultimately end the nation’s longest period of prosperity illustrates how Fed action, or inaction, can be brought home to ordinary Americans.


The equities free fall that began in March 2001 ultimately wiped out a third of the stock market’s value, shuttering companies and leaving many unemployed.


“Effective, prudential interventions in ’98 and ’99 could have saved a lot of people a lot of grief,” Galbraith said. “He should have been warning people that it was not wise to concentrate their assets in this one area. You could’ve prolonged the … expansion.”