Ben Bernanke

  • 18 Jan 2013 at 4:42 PM

2007 Fed Not As Informed About 2008 As 2013 Critics

Today the Federal Reserve released transcripts of its 2007 FOMC meetings. The Fed has a policy of releasing these transcripts with a five-year lag. This has various advantages in terms of encouraging candor and allowing the FOMC members to discuss material nonpublic information, etc., but it has the singular disadvantage of making them look like idiots, because everyone else is five years smarter than they are. “Hahaha William Dudley thinks that Bear Stearns is fine! Bear disappeared like four years ago! Has he been living under a rock? What a moron!”

Still I think the advantages of delay outweigh the disadvantages, for the Fed. Here is Dudley in August 2007 on Bear, etc.:

As far as the issue of material nonpublic information that shows worse problems than are in the newspapers, I’m not sure exactly how to characterize that because I guess I wouldn’t know how to characterize how bad the newspapers think these problems are. [Laughter] We’ve done quite a bit of work trying to identify some of the funding questions surrounding Bear Stearns, Countrywide, and some of the commercial paper programs. There is some strain, but so far it looks as though nothing is really imminent in those areas. Now, could that change quickly? Absolutely. For example, one question that we’re following with Bear Stearns is what their clients do in terms of continuing to want to do business with them. Obviously, if people start to pull back in their willingness to do business with Bear Stearns, the franchise value of the company goes down, and that exacerbates the problem. One thing that we have heard about Bear Stearns is that they have approached a number of major commercial banks about a secured line of credit. We don’t know what the outcome will be, but they are clearly trying to get even better liquidity backstops than those they have in place today. But as far as we know, they have enough liquidity—and Countrywide as well at this moment.

Laugh if you want, but that’s sort of the thing about banks and liquidity: it’s there one day, and gone the next, and its disappearance is never predictable because as soon as it becomes predictable that your liquidity will disappear, it has already disappeared. However good may be your arguments. Bear, at the time, really was drowning in liquidity.1 Dudley just looks a little wrong in hindsight; the guys at Bear who were working to bail their sinking ship had no choice but to make contemporaneous public statements about their liquidity that were true until they weren’t. And that looked, by virtue of the quick flip between “drowning in liquidity” and just “drowning,” like they weren’t true – in a liability-incurring way – even when they were.

The transcripts don’t seem particularly laughable to me2; the FOMC members seem serious and sensible and earnest and informed and reasonably on top of current events without being all that on top of the future.3 This is called the efficient markets hypothesis. Here is Ryan Avent: Read more »

It takes a strong man to look at Ben Bernanke’s gentle, bearded face and tell him to piss off. Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, is just such a man.

Lacker’s used every opportunity to let Bernanke and his rotating cast of puppets know that they’re wrong about the stimulus and that they’re imperiling what used to be the Fed’s only mission, controlling inflation. And he’s apparently doing so at substantial risk to his own standing, because while bickering, name-calling and kicking-and-screaming disagreement is all the rage every else in the District of Columbia, dissent does not go over well at the marble Politburo on Constitution Avenue NW. Read more »

  • 04 Jan 2013 at 5:37 PM

Wither QE?

It seems Bernanke may not quite have all of his ducks in a row.

Of the majority favoring the programs, officials were about evenly split between those who thought the Fed would be likely to end the bond buying by “sometime around the middle of 2013″ and those who thought the central bank would want to continue beyond then, the minutes said. Some saw the programs continuing until year-end.

Some wanted to stop buying bonds four Mondays ago. That prospect did not make the boys and girls on the floor very happy. Read more »

  • 10 Dec 2012 at 6:02 PM

Decision Made, Fed To Hold Meaningless Meeting

There’s little drama about what the Federal Reserve will say on Wednesday: It’s going to keep buying bonds in its effort to stimulate the economy. But what will the central bank be saying by what it doesn’t say? Read more »

Who should replace Ben S. Bernanke as Chairman of the Federal Reserve when his term ends in January 2014? If anyone cared to ask us, we’d say no one: we like our Fed Chairman soft-spoken, bearded, and just as comfortable in dad jeans as they are in their bespoke Jos. A. Bank suits. But nobody asked and, according to Andrew Ross Sorkin, Bernanke has told “close friends” that regardless of whether or not Obama wins a second term, he’s ready to move on. Apparently qualified successors are few and far between and while Larry Summers is said to be “at the top of the list,” the fact that Treasury Secretary Tim Geithner may finally be granted freedom from his own personal Guantanamo Bay and will also necessitate a replacement who will have to work closely with the new Fed Chair poses some staffing issues, on account of the perception that Summers is somewhat difficult to work with. Read more »

And wears them! In public! Where people can see him! The previously held assumption that he eats, sleeps, and showers exclusively in suits from Jos A. Bank hath been shattered! (This is almost as disorienting as the time Alan Greenspan was spotted in a tank top and cutoffs while running errands, though not nearly as traumatizing as the time the neighborhood kids got more than they’d bargained for when he came out to yell at them wearing only slipper-socks and his wife’s dressing gown!) Read more »

  • 03 Jul 2012 at 1:13 PM
  • HMD

Bob Diamond’s Daughter Releases Statement Re: Father’s Firing

While most offspring are typically not available for comment following the resignations, voluntary or otherwise, of their banker dads (lookin’ at you, Jimmy Cayne, Jr.), earlier today prolific Tweeter Nell Diamond had this to say to the Brits who have been cheering her father’s departure: “George Osborne and Ed Miliband you can go ahead and #HMD.” Read more »