President Bush has nominated Ben Bernanke, his top economic adviser, to serve as the new chairman of the Federal Reserve Board when it comes time for Alan Greenspan to retire January 31.
In announcing Bernanke’s nomination on October 24, Bush said Bernanke is the right man “to build on the record Alan Greenspan has established,” as “he’s built a record of excellence as both an academic and policymaker.” If confirmed by the Senate, Bernanke said he would “maintain continuity with the policies and policy strategies established during the Greenspan years.” Bernanke, a former Federal Reserve governor and former professor at Princeton University, was chosen as Bush’s top economic adviser earlier this year.
Industry officials are already applauding Bush’s decision to choose Bernanke to lead the Fed. “Ben Bernanke knows monetary theory forwards and backwards, and he himself has contributed a great deal to the existing body of knowledge on the subject,” said Dorsey Farr, Ph.D., vice president, director of asset allocation and portfolio strategy at Wilmington Trust. “He is an advocate of inflation-targeting,” Farr says, and would “likely advocate establishing a formal inflation target for the Fed.” Bernanke has also expressed “skepticism about the appropriateness and feasibility of central bank intervention to deflate asset-pricing bubbles–a topic of considerable debate over the past few years,” Farr says. “So, while Bernanke might publicly express concerns about the level of asset prices–as Greenspan did with his comments about irrational exuberance and his recent statements about the housing market–his implementation of policy would likely mimic Greenspan’s laissez faire approach toward asset prices.”