Bernanke, who led the U.S. central bank in its aggressive efforts to
right the economy after the financial crisis and pull it out of the
Great Recession, joined the centrist policy think tank in Washington
as a distinguished fellow in residence, Brookings said.
He settled into his office in the morning, a spokeswoman said, and a
new colleague saw him in the cafeteria at lunchtime.
Bernanke, appointed by Republican President George W. Bush as Fed
chairman in 2006, gaveled his final policy-setting meeting last
week, at which the central bank continued its winding down of the
controversial and massive bond-buying program that was Bernanke's
signature strategy to jump-start the tepid recovery.
He was succeeded as Fed chairman by Janet Yellen, the former vice
chair who was sworn in on Monday morning.
Brookings is home to a number of other former Fed officials,
including Donald Kohn, the vice chair who preceded Yellen. The
institution, home also to scholars on a vast range of topics from
climate change to refugee resettlement, prides itself as politically
nonpartisan and having members on the left and right, although some
see it as somewhat left of center.
Bernanke, a former Princeton University professor, is expected to
write a book and has brought along one of his top Fed press
deputies, David Skidmore, to help with editing and research. There
are no formal restrictions on his speech now that he is in the
private sector, though like any other Fed official he is barred from
disclosing confidential information.
"I will still pay close attention to what he says and writes, not
because I think he'll have some inside edge on what will happen next
with Fed policy, but because he is still one of the smartest guys on
the planet when it comes to central banking and monetary theory,"
said Michael Feroli, JP Morgan's chief economist.
According to a Brookings statement, Bernanke will help bring
"rigorous analysis to critical questions" at the institution's new
Hutchins Center on Fiscal and Monetary Policy, which is named for
private equity investor and donor Glenn Hutchins.
Bernanke's last public appearance was January 16 at Brookings, where
he said the Fed should give the economy the stimulus it needs
despite "credible" worries that its massive bond-buying could
destabilize the financial system.
Last week, in his final act as chair, Bernanke and fellow
policymakers unanimously agreed to trim $10 billion more from the
quantitative easing program, which is now running at $65 billion per
SPOTLIGHT WILL FADE
Bernanke's Fed bought trillions of dollars of bonds and promised to
keep interest rates near zero well into the future as he fought to
respond to the 2007-2009 financial crisis and recession, which
infected the rest of the developed world and saw the U.S.
unemployment rate climb to 10 percent in 2009.
While the U.S. recovery has been erratic, joblessness has fallen to
6.7 percent and economic growth has picked up — a welcome backdrop
for Bernanke as he moves on from the Fed.
Bernanke was not available for an interview. The Brookings
spokeswoman did not comment on his compensation, nor on what areas
he would focus his initial work.
Having warm ties with Yellen and the respect of the remaining Fed
policymakers, Bernanke will probably draw economists' and investors'
attention for some time.
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"Given that he was an integral part of the policy decision making
over the past five years ... over the next year he will have some
value to the market but less so than Yellen, and it will diminish
over time," said Millan Mulraine, a researcher at TD Securities in
"I suspect he will probably keep a fairly low profile — he doesn't
want to complicate the process for the new chair."
A QUIET PLACE TO WRITE A BOOK
While Bernanke's legacy will hinge heavily on whether the Fed's
massive balance sheet, at $4 trillion and counting, sparks inflation
or market disruptions in the future, for now he is being praised as
the soft-spoken chairman whose unprecedented policy actions helped
avert economic calamity.
His decision to move to a think tank contrasts with the job history
of his predecessors.
Alan Greenspan, whose tenure at the Fed is now clouded as having
sown the seeds of the crisis, has been criticized for cashing in on
his experience by consulting for Wall Street. The former chairman
founded his own consulting firm shortly after stepping down on
January 31, 2006, and a year and a half later was lending his
expertise to Deutsche Bank.
Seven months after former chair Paul Volcker stepped down in 1987,
he became part-owner and chairman of a small New York investment
banking firm, Wolfensohn & Co. Volcker also took a professorship
post at Princeton, where he had gone to college.
Brookings, located about a mile north of the Fed's headquarters in
the U.S. capital, is also home to former Fed vice chair Alice Rivlin,
who is a senior fellow at the economic studies program that Bernanke
joins. Former Fed Chairman William McChesney Martin was on its board
of trustees, and Leal Brainard, who has been nominated to serve on
the Fed Board, was a senior fellow there for many years.
David Wessel, a former reporter who is now a director at the
Hutchins Center, quipped that Bernanke will not have to sit through
any more policy-setting meetings, testify to "an occasionally
hostile Congress," or "listen to complaints from emerging market
In a note on the Brookings website, Wessel also said Brookings will
help with the book Bernanke plans to write.
TD's Mulraine said he plans to read Bernanke book, not that it will
contain any "salacious details" about the Fed but for the insights
it will provide about policymaking.
(Additional reporting by Ann Saphir in
San Francisco and Emily Stephenson in Washington; editing by Chizu
Nomiyama, Grant McCool and Mohammad Zargham)
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