Who is 'Ben Bernanke'

Ben Bernanke was the chairman of the board of governors of the U.S. Federal Reserve from 2006 to 2014. Bernanke took over the helm from Alan Greenspan on February 1, 2006, ending Greenspan's 18-year leadership at the Fed. A former Fed governor, Bernanke was chairman of the U.S. President's Council of Economic Advisors prior to being nominated as Greenspan's successor in late 2005.

BREAKING DOWN 'Ben Bernanke'

Born Ben Shalom Bernanke on December 13, 1953, he is the son of a pharmacist and a schoolteacher and was raised South Carolina. A high-achieving student, Bernanke completed his undergraduate degree summa cum laude at Harvard University, then went on to complete his Ph.D. at MIT in 1979. He taught economics at Stanford and then at Princeton University, where he chaired the department until 2002 when he left his academic work for public service. He officially left his post at Princeton in 2005.

Professional Life of Ben Bernanke

Bernanke was first nominated as chairman of the Fed by President George W. Bush in 2005. He had been appointed to President Bush's Council of Economic Advisors earlier the same year, which was widely seen as a test run for succeeding Greenspan as chairman. In 2010, President Barack Obama nominated him for a second term as chairman. He was succeeded by Janet Yellen as chairman in 2014. Prior to serving his two terms as chairman of the Federal Reserve, Bernanke was a member of the Federal Reserve's Board of Governors from 2002 to 2005.

Bernanke's Role During the Credit Crisis

Ben Bernanke was instrumental in stimulating the U.S. economy after the 2008 banking crisis that sent the economy into a downward spiral. He took an aggressive and experimental approach to restore confidence in the financial system.

One of the multiple strategies that the Fed applied to curb the global crisis was enacting a low-rate policy to stabilize the economy. Under the tutelage of Bernanke, the Fed slashed the benchmark interest rates near to zero. By reducing the federal funds rate, banks lend each other money at a lower cost, and in turn, can offer low-interest rates on loans to consumers and businesses.

As conditions worsened, Bernanke proposed a quantitative easing program. The quantitative easing scheme involved the unconventional purchase of Treasury bond securities and mortgage-backed securities (MBS) in order to increase the money supply in the economy. By purchasing these securities on a large scale, the Fed increased the demand for them, which led to an increase in the prices. Since bond prices and interest rates are inversely related, interest rates fell in response to the higher prices. The lower interest rates reduced the financing costs for business investments, hence improving a business’ financial position. By bolstering business’ operations and activities, businesses were able to create more jobs which contributed to a reduction in the unemployment rate.

Ben Bernanke also helped to curb the effects of the rapidly deteriorating economic conditions by bailing out a number of troubled big financial institutions. While the Fed underwrote the decision to let Lehman Brothers fail, they bailed out companies, such as AIG Insurance, due to the higher risk that the bailed-out companies posed if they went bankrupt. In the case of AIG, Bernanke believed that the company’s huge liability was solely isolated in its financial products which involved hundreds of billions of dollars in derivative speculation. In the event that the company lost out on its speculative position on these derivatives, it would not have sufficient funds to pay out or cover its losses. For companies like Merrill Lynch and Bear Stearns, the Federal Reserve incentivized Bank of America and JPMorgan to purchase and take over both companies by guaranteeing the bad loans of the troubled banks.

In his 2015 book, The Courage to Act, Bernanke wrote about his time as chairman of the Federal Reserve and exposed how close the global economy came to collapsing in 2008, stating that it would have done so had the Federal Reserve and other agencies not taken extreme measures. President Barack Obama has also stated that Bernanke's actions prevented the financial crisis from becoming as bad as it could have been. However, Bernanke has also been the subject of critics who claim he didn't do enough to foresee the financial crisis.

Ben Bernanke’s Legacy

Although Bernanke’s actions were indelible to the recovery of the global economy, he faced criticism for the approaches that he took to achieve this recovery. Economists criticized his pumping hundreds of billions of dollars into the economy through the bond-purchase program which potentially increased individual and corporate debt, and led to inflation. In addition to these economists, legislators also criticized his extreme measures and opposed his re-appointment as Federal Reserve Chairman in 2010. President Barack Obama, however, re-appointed him for a second term.

Bernanke was the most influential and important person in America during his tenure as Fed chairman. His monetary and fiscal policies helped stabilize the American economy, and in effect, the global economy, making him the most important person in the global economy as well.

As of April 2018, Ben Bernanke is currently serving as an economist at the Brookings Institution, a nonprofit public organization based in Washington, DC, where he providesadvicee on fiscal and monetary policies. He also serves as a senior advisor to Pimco and Citadel.

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