Bernanke schools public on Federal Reserve’s role
WASHINGTON — Facing brickbats from left and right, Federal Reserve chairman Ben Bernanke revisited his academic roots to answer the skeptics Tuesday, delivering a public lecture on the bank’s role.
The bookish former professor visited George Washington University to give the first in a series of four lectures on central banking, a fresh charm offensive designed to raise the level of debate about the Fed.
During the throes of the financial crisis, the Fed came under sustained fire.
The normally secretive central bank has struggled to explain its vast market interventions, and why it has not been able to help the US economy recover more quickly.
Bernanke, who has taught at Princeton, Stanford, and New York universities and the Massachusetts Institute of Technology, reprised his professorial past before roughly 30 students and 100 times that watching online.
The 50-minute lecture, titled the “Origins and Mission of the Federal Reserve,” stuck to a basic outline about the role of central banks, while touching on some of the Fed’s mistakes during the Great Depression.
“This is what I used to do before I got into this line of work,” Bernanke quipped at the beginning of his talk to business school students.
He then launched into an explanation of the role of the central bank in providing liquidity during financial crises and preventing boom and bust by adjusting monetary policy.
Students appeared to be on board, except, perhaps, when Bernanke sought to explain a bank run and being a lender of last resort through the 1946 Christmas-themed movie “It’s a Wonderful Life.”
The iconic Frank Capra film, starring James Stewart, tells the story of a building and loan company that runs into trouble with customers demanding their deposits.
But it was largely unknown to the assembled students, who were born roughly half a century after it was made.
Still, Bernanke appeared to get his message across and do a little bit to show the Fed is staffed by ordinary — if permanently besuited — human beings.
“I really enjoyed it,” said 20-year-old Leland Gohl. “He engaged us quite a bit, he is very friendly.”
“It is a great opportunity to have such a renowned person here at GWU… he seems like a very humble person.”
Since taking office in 2006 Bernanke has campaigned to make the Fed less secretive: holding regular press conferences, giving more interviews and being more explicit in the Fed’s expectations about the trajectory of the economy.
The campaign has had limited success as Congress and Republican presidential candidates have launched a series of personal attacks against the chairman, accusing him of stoking future inflation.
Bernanke’s three subsequent lectures are titled “The Federal Reserve after World War II,” “The Financial Crisis and the Great Recession” and “The Aftermath of the Crisis”
All of the lectures will be streamed live online at ustream.tv/federalreserve.