About Bernanke-Chairman of the Federal Reserve Board of Governors; and his role

Who Is Ben Bernanke?:

Ben S. Bernanke was appointed Chairman of the Board of Governors of the Fedreal Reserve System in 2006 replacing Alan Greenspan. Congress appointed Bernanke for his knowledge of how monetary policy contributed to the Great Depression and his belief in inflation targeting.

He created many innovative Fed tools to prevent a global depression during the credit crisis. He led the Fed in taking on new roles, such as bailing out Bear Stearns and the $150 billion bailout of insurance giant AIG (American Insurance General). The Fed loaned $540 billion to money market funds to stop a global panic.

Why Is Bernanke Important to the U.S. Economy?:

Federal Reserve Chairman Bernanke is responsible for guiding monetary policy for the U.S. economy. This was more critical through the last decade, as fiscal policy became hamstrung (make ineffective) by a $12 trillion national debt, caused by a $500 billion annual deficit and $700 billion in military spending. As the spokesperson for the Fed, Bernanke is often seen as the country's premier economic expert, and his words can sway (move backward) the stock market and the value of the dollar. For this reason, Ben Bernanke is the most important person in the U.S. and, therefore, the global economy.

What Is the Role of the Federal Reserve Chairman?:

Although it is the Board of the Federal Reserve that sets policy, the Chairman has traditionally taken a strong leadership role. Since the Chairman is appointed for four-year terms, he is expected to be more independent than an elected official, who answers to voters. This allows the Fed to take a long-term view, and not react to short-term political pressure. That's because the Fed's tools, such as the Fed Funds Rate, act slowly over six months. The U.S. economy is like a large ship - it needs gradual direction. Stop- go monetary policy causes uncertainty, which was a major reason for the 1970's stagflation.

Bernanke and the 2008 Credit Crisis:

Under Bernanke, the Federal Reserve made very creative use of its tools. Prior Chairmen used only the Fed Funds rate - raising it to stem inflation or lowering it to prevent recession. Between September 2007 - December 2008, Bernanke decisively lowered the rate 10 times, from 5.25% to 0%. But this wasn't enough to restore liquidity to banks panicked by defaulting sub prime mortgages. These loans had been repackaged and sold them in mortgage-backed securities that were so complicated that no one really understood who had the bad debt.

FED Chairman Ben S. Bernanke