Bernanke Nomination Applauded by Brokerage Industry
With the nomination of Ben Bernanke to chairman of the Federal Reserve Board—likely the most powerful banking job in the world—President Bush hit the nail on the head, say brokerage industry officials, as well as brokers. His long tenure at the Federal Reserve makes him well prepared for the role, and he will not likely mark a significant departure from Chairman Alan Greenspan’s 18 1/2 year reign over the institution, they say.
An extra plus: He doesn’t talk in circles or cryptic language, as Greenspan has a penchant for doing. And that’s especially important for a job in which everything you say can, and does, move markets. Greenspan, who many investors see as the greatest central banker of all time, steps down in January 2006, and Bernanke will face the triple perils of inflation, a housing price bubble and the enormous trade deficit.
The Securities Industry Association’s president, Marc Lackritz, applauded the nomination in a statement Monday. “His previous service on the Fed’s board of governors under Greenspan has provided him invaluable preparation for this critical role, and his steady hand and solid judgment should serve our financial markets well,” Lackritz said in the statement.
When asked if the president made the right choice, Eric Park, a broker at Linsco/Private Ledger, says, “Absolutely. Bernanke is someone who understands both international and domestic economics. He has a presence on both, and his comfort level with international finance will prove to be a success, especially in today’s industry, which is globalizing.” The only major difference, and perhaps the most important one, says Park, is that Bernanke will bring greater transparency to the job. “If Greenspan said something, you didn’t really understand. But Bernanke is big on saying what he means. He is also a known entity, and he is about as close as you can get to perfect for this job.”
Mark Lee, a broker at A.G. Edwards, believes Bernanke’s reign, if confirmed, will simply be a continuation of Greenspan’s. Indeed, Bernanke has said that if confirmed, “my first priority will be to maintain continuity with the policies and policy strategies established during the Greenspan years.” One Merrill Lynch broker says he is not surprised by the nomination. Bernanke was one of three candidates said to be favorites for the nomination.
Most expect that Bernanke will be confirmed, says Ian Quan-Soon, president of IQ Financial Services in New York. “He’s a breath of fresh air for the industry. He seems like he is very hands-on and will keep the focus on monitoring interest rates and trying to hold a line on inflation.”
Bernanke, 51, holds a B.A. in economics from Harvard and a Ph.D. in economics from M.I.T. He currently serves as chairman on the President’s Council of Economic Advisers. If confirmed, he will replace Greenspan on Jan. 31, 2006.
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