Who is Big Ben
Big Ben is a nickname referring to Ben Bernanke, who served as Federal Reserve chairman under President George W. Bush and President Barack Obama.
BREAKING DOWN Big Ben
Big Ben received widespread use among news media as a nickname for Ben Shalom Bernanke, who President George W. Bush nominated for chairman of the board of governors of the U.S. Federal Reserve in 2005. Bernanke’s credentials included degrees from Harvard and MIT, as well as teaching positions in the economics departments of Stanford and Princeton University.
Bernanke succeeded Alan Greenspan, who by 2005 had served as Fed chair for 19 years. The financial crisis of 2008 marked the most consequential event of Bernanke’s chairmanship, and his efforts to move the national economy out of its tailspin led “TIME” magazine to name him “Person of the Year” in 2009.
Janet Yellen, who had served previously as vice chair of the Federal Reserve, succeeded Bernanke as Fed chair in 2014. Bernanke currently serves as an economist at the Brookings Institution, and as an advisor for Pimco and Citadel.
Big Ben and the 2008 Financial Crisis
Bernanke’s response to the 2008 crisis, though ultimately successful, generated a certain amount of controversy. The collapse of Lehman Brothers led to a liquidity crisis in bond and money markets, as banks grew skittish about engaging in the type of lending that keeps the global economy afloat. Bernanke slashed benchmark interest rates to near zero in order to stimulate lending and ease the credit crunch.
The practice of quantitative easing proved more controversial. Through the program, the Federal Reserve made large-scale purchases of Treasury bonds and mortgage-backed securities in a bid to increase the price of these securities by creating artificial demand for them. As one typically would expect of bonds, the rise in the price of the securities corresponded with falling interest rates, which in turn spurred increased investment among corporate players willing to take advantage of the lower cost of borrowing.
In addition to these efforts, Bernanke worked with the Fed to bail out other Wall Street firms that wound up in trouble due to the financial crisis, in some cases encouraging sound institutions to acquire failing ones. Bank of America’s acquisition of Merrill Lynch and JPMorgan Chase’s absorption of Bear Stearns represented two of the highest-profile such cases.
Taken together, Bernanke’s actions helped to turn the country’s economy back toward growth following the 2008 crisis. By 2013, the U.S. housing market had entered a sustained recovery, unemployment continued to fall back into the high-single digits from above 10 percent at its peak.