Bernanke arrives for first day on the job at Brookings

Published: Monday, 3 Feb 2014

Ben Bernanke arrived for his first day on the job at the Brookings Institution on Monday morning, just three days after completing an eight-year tenure as chairman of the U.S. Federal Reserve.

Bernanke, whose stint atop the U.S. central bank was marked by financial crisis and policy experimentation in the face of the Great Recession, joins the centrist policy think tank in Washington as a distinguished fellow in residence, Brookings said on Monday.

There had been some speculation that the former Princeton professor would land at Brookings, where he is expected to write a book, though the quick jump from one job to another may come as a surprise.

Brookings prides itself as nonpartisan and having members from both sides of the U.S. political spectrum, though some see it as somewhat left of center

"Brookings scholars have a well established reputation for contributing innovative ideas and trenchant analysis to economic and other public policy debates," Bernanke said in a statement issued by Brookings. "I welcome the opportunity to engage in that vibrant community through research and writing."
Bernanke, a George W. Bush appointee who became Fed chairman in 2006, was succeeded by Janet Yellen, the former vice chair who was sworn in on Monday morning.
Bernanke settled into his new office in Washington on Monday, a spokeswoman said. According to the statement, he will help bring "rigorous analysis to critical questions" at the institution's new Hutchins Center on Fiscal and Monetary Policy, which is named for private equity investor and donor Glenn Hutchins.
Bernanke's last public appearance was January 16 at Brookings, where he said the Fed should give the economy the stimulus it needs despite "credible" worries that its massive bond-buying program could destabilize the financial system.
Last week, in his final act as chair, Bernanke and fellow policymakers unanimously agreed to trim another $10 billion from the quantitative easing program, which is now worth $65 billion per month.
Spotlight will fade
Buying bonds and promising to keep interest rates near zero well into the future are Bernanke's two signature policy responses to the 2007-2009 financial crisis and recession, which infected the rest of the developed world and saw the U.S. unemployment rate climb to 10 percent in 2009.
Strobe Talbott, the president of Brookings, said Bernanke's "firm, steady hand at the Fed's tiller came at a crucial time in our nation's history. We know he'll bring insights from his tenure at the Fed to his work at Brookings," he said.
Bernanke was not available for an interview. The Brookings spokeswoman did not immediately comment on his compensation, or on what areas he would focus his initial work.
Having warm ties with Yellen and the respect of the remaining Fed policymakers, Bernanke will probably draw economists' and investors' attention for some time.
"Given that he was an integral part of the policy decision making over the past five years, ...over the next year he will have some value to the market but less so than Yellen, and it will diminish over time," said Millan Mulraine, a researcher at TD Securities in New York.
"I suspect he will probably keep a fairly low profile—he doesn't want to complicate the process for the new chair."
A quiet place to write a book
While Bernannke's legacy will hinge heavily on whether the Fed's massive balance sheet, at $4 trillion and counting, sparks inflation or market disruptions in the future, for now he is being praised as the soft-spoken chairman whose aggressive policy actions helped avert economic calamity.
Looking back, Alan Greenspan's tenure at the Fed is now clouded as having sown the seeds of the crisis. The former chairman stepped down on Jan. 31, 2006, after which he immediately founded his own consulting firm, Greenspan Associates.
Seven months after former chair Paul Volcker stepped down in 1987, he became part-owner and chairman of a small New York investment banking firm, Wolfensohn & Co. Volcker also took a professorship post at Princeton, where he had gone to college.
Brookings, located about a mile (1.6 km) north of the Fed's headquarters in the U.S. capital, is also home to former Fed vice chairs Donald Kohn and Alice Rivlin, who are senior fellows at the economic studies program that Bernanke joins. Former Fed Chairman William McChesney Martin was on its board of trustees.
David Wessel, a former reporter who is now a director at the Hutchins Center, quipped that Bernanke won't have to sit through any more policy-setting meetings, testify to "an occasionally hostile Congress," or "listen to complaints from emerging-market central bankers."
In a note on the Brookings web site, Wessel also said Brookings will help with the book Bernanke plans to write.
TD's Mulraine said he plans to read Bernanke's book, not that it will contain any "salacious details" about the Fed but for the insights it will provide about policy-making.
—By Reuters

http://www.cnbc.com/id/101359296