Friday is Ben Bernanke's last day as chairman of the Federal Reserve. It's certainly been an eventful eight years and, when you include his tenure as Fed vice chair (2002-2005), Ben Bernanke is clearly one of the most consequential central bankers of all-time. But was he a good one? A great one? Or a miserable failure?
In anticipation of Bernanke's departure, we asked a selection of Daily Ticker guests to give their thoughts on Bernanke's legacy. Here's a sample:
"He is one of the greatest heroes of government in the modern era," says Dan Alpert, managing partner at Westwood Capital and author of The Age of Oversupply. "If you actually looked at the financial crises as a World War II kind of moment, this was a guy when there were no adults in the room who was actually willing to step up [and] keep his head about him. He did the right thing at the time."
Bank of America Merrill Lynch economist Michelle Meyer, largely agrees with that assessment, which is the prevailing wisdom among most mainstream policymakers, economists and academics. "I think that Fed chairman Bernanke did a miraculous job...in an environment where uncertainty was high [and] the downside risks were large," she says. "He managed in my opinion to stem off what would have been a very severe crisis in the financial markets and the economy."
On the other hand, Charles Biderman, CEO of TrimTabs Investment Research, describes Bernanke as "the biggest bubble blower in the history of all markets" and criticizes the outgoing Fed chief for "years of money printing" that resulted in, at best, a desultory economic 'recovery' for everyone not in the top 1%.
A more nuanced view comes from Mark Zandi, chief economist at Moody's Analytics.
"We really won't have a full accounting of his tenure for a number of years down the road," he says, suggesting the success or failure of the Fed's 'exit strategy' will ultimately define Bernanke's legacy. "But if you asked me for a grade right now for his eight-year tenure I'd say it's a very solid 'A'. I think he performed marvelously during the crisis...and we should be thankful that he was leading the Fed. He's very important to how well this turned out."
Of course, you can never prove a counterfactual but the people who criticize Ben Bernanke seem to have amnesia about how terrifying the 2008 crisis was and how close the financial system came to collapsing, triggering a downturn akin to the Great Depression.
To reiterate (or repurpose), what I wrote here, while there's plenty to complain about Bernanke's methods, it's hard to argue with the results:
- The U.S. economy has been officially expanding for 54 consecutive months and GDP growth in the second half of 2013 was the strongest since 2003 . (Related: The economy is only going to get stronger: Mark Zandi)
- The U.S. financial system has mounted an impressive recovery from the depths of the 2008 crisis. Profits for the six biggest banks -- J.P. Morgan, Citigroup, Bank of America, Wells Fargo, Goldman Sachs and Morgan Stanley -- hit $76 billion in 2013, just $6 billion shy of the record set in 2006. (Of course, it's not hard to make money when you can borrow at zero and invest at a risk-free rate currently at 2.7% on 10-year Treasuries.)
- Millions of Americans remain under-employed or unemployed but the trend of slow but unspectacular growth -- around 2.2 million jobs per year -- is expected to continue and possibly accelerate in 2014 if business capital spending finally picks up.
- The housing market has mounted a strong recovery from the depths of 2008-2009. The most recent S&P Case-Shiller 20-city Index showed home price appreciation at 13.8% on a year-over-year basis, the best November performance since 2005. (Of course, Bernanke's support of Greenspan's 1% fed funds rate in the aftermath of the dot.com bubble and 9/11 helped create the housing bubble in the first place -- but at least Bernanke was around to try and clean up the mess.)
I also give Bernanke high marks for standing up to some harshly critics in Congress and pointing out the myriad flaws in fiscal policy in recent years. My view is that for all the criticism directed at Bernanke -- some of it justified, much of it vitriolic -- it's too bad we won't have him to kick around any more.
Of course, we want to know what YOU think about Bernanke's time at the Fed. Please let us know in the comments section below, hit us up on Twitter and Facebook, and take our poll on the homepage of Yahoo Finance.
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