Time magazine names Bernanke "Person of the Year"
Federal Reserve Chairman Ben Bernanke was named Person of the Year by Time magazine on Wednesday, giving him a high-profile boost as he tries to fend off proposals that might weaken the Fed`s independence.
New York: Federal Reserve Chairman Ben Bernanke was named Person of the Year by Time magazine on Wednesday, giving him a high-profile boost as he tries to fend off proposals that might weaken the Fed`s independence.
The selection puts the mild-mannered Bernanke, a former professor, in the company of US President Barack Obama, Pope John Paul II and Russian President Vladimir Putin, among other prominent world figures the magazine has picked in past years.
The Senate is considering his nomination to a second term to head the Fed -- the US central bank, and while he is expected to win confirmation, criticism of the Fed among the public and members of Congress is at its highest in decades.
The Fed has come under fire for its role in bailouts of Wall Street and some lawmakers are pushing proposals to curb its regulatory powers and bring it under more scrutiny in ways the central bank worries will compromise its independence.
One poll by Rasmussen Reports this month showed public support for Bernanke`s nomination at a scant 21 percent, with 41 percent stating opposition, but he continues to enjoy support on Wall Street and among many lawmakers.
"Ben is the person that kept us from going over the edge of the precipice and into the abyss," said former Fed Governor Lyle Gramley, now a senior economic adviser at Soleil Securities. He said the Person of the Year selection could help Bernanke politically.
Time credited the 56-year-old Bernanke with creative leadership that helped set the US economy on a path to recovery even as he and other policymakers remain concerned about the high unemployment rate of 10 percent.
Double-digit unemployment is one reason the Fed, which cut benchmark interest rates to near zero a year ago, is likely to repeat a vow to keep them exceptionally low for "an extended period" when it wraps up a two-day meeting on Wednesday.
"Bernanke ... knows the economy would be much, much worse if the Fed had not taken such extreme measures to stop the panic," Time said in its cover story on Bernanke, which noted he had greatly expanded the Fed`s power through his efforts to fight the financial crisis.
Bernanke steps into limelight
Time`s Person of the Year selection, widely watched in US media, is not meant to be celebratory but rather to focus on a world figure who has been highly influential in the past year.
Still, the distinction is one that analysts said would probably help Bernanke, an expert on the Great Depression who succeeded Alan Greenspan in 2006.
For the first several years of his tenure, Bernanke, known for his low-key, analytical manner, had a much lower profile than Greenspan, who was considered a rock star on Wall Street and was extremely popular with the public during his tenure.
The rising criticism of the Fed has prompted Bernanke to step into the limelight to a much greater extent than he has before, including granting an interview to the CBS news magazine program "60 Minutes" and appearing at a nationally televised town-hall meeting in Kansas City, Missouri.
The US Senate Banking Committee is due to vote on his nomination on Thursday. His first four-year term as Fed chief expires on January 31.
Obama, a Democrat, said in August he was renominating Bernanke, a Republican first named to the Fed by President George W Bush.
Congress is considering proposals that would strip the Fed of its regulatory authority over major banks and expose its interest rate decisions to audits.
The Fed has not faced the same pitch of public acrimony since the 1980s, when then-chairman Paul Volcker`s interest-rate increases aimed at breaking double-digit inflation threw the economy into two back-to-back recessions.
Gramley, who served under Volcker, said he thinks the anger at the central bank now may be even greater than it was then.
"Then the problem was the public didn`t like high interest rates but there was an understanding on the part of the public that we had a terrible inflation problem that had to be defeated," he said.
Now, Gramley said, "The public doesn`t understand why (the Fed) had to bail out Bear Stearns or AIG."
Douglas Elliott, a scholar at the Brookings Institution, said there`s a good chance the tensions over the Fed will wane as the economy begins to improve.
But he said the increasingly tough political atmosphere for the Fed will be watched closely by investors and in countries such as China that have big holdings of government securities and want to see vigilance by U.S. authorities on inflation.
"We have a huge amount of foreign investment in our government securities as well as private securities," Elliott said. "Many foreigners are very worried that we`re going to solve our deficit problems by inflation."