Tags: Zuckerman | Obama | Bernanke | Fed

Zuckerman: Obama's 'Shabby' Treatment of Bernanke Is 'Unpardonable'

Image: Zuckerman: Obama's 'Shabby' Treatment of Bernanke Is 'Unpardonable'

Friday, 26 Jul 2013 10:13 AM

By Dan Weil

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Mort Zuckerman, chairman of U.S. News & World Report, lauds Federal Reserve Chairman Ben Bernanke for his deft handling of the economy and criticizes President Barack Obama for forcing him into retirement.

"The Fed and Mr. Bernanke were instrumental in pulling the country — and ultimately the world economy — back from the abyss" during and after the financial crisis of 2008 and 2009, Zuckerman writes in The Wall Street Journal.

"Yet the heroic effort seems increasingly held in low regard, if not contempt."

Editor's Note:
Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

Bernanke's second term ends in January and already speculation is rife about who will succeed him. "He could have been reappointed, but he is being pushed toward the exit — by none other than the president of the United States," Zuckerman says.

Last month, Obama said in a TV interview that Bernanke had "stayed a lot longer than he wanted or he was supposed to."

Given what Bernanke has done, "that is an astonishing development," Zuckerman contends.

"This comment ... deprived the Fed chairman of the dignity of making his own announcement."

Bottom line: "Such shabby treatment is unpardonable," he states. "Ben Bernanke should be honored for his contributions. When the financial disaster hit in 2008, the Federal Reserve was quite simply the country's last hope, and it was the chairman who came to the rescue."

Bernanke's expertise as a scholar of the Great Depression was crucial in that rescue, Zuckerman explains.

"When the crisis hit in 2008, he went way beyond the standard response of a central banker, which was to lower interest rates and hope that cheaper credit would somehow work its way to more borrowing, more activity, more jobs."

Bernanke realized that more was needed than that, Zuckerman asserts. So he came up with novel policies to save the day. For instance, more than $1 trillion in lending programs were created to aid troubled financial firms. The Fed also purchased the debt of industrial companies.

"The Fed's policy sustained mortgages, money market funds, commercial paper, auto loans and student loans," Zuckerman writes. "Mr. Bernanke's intervention was instrumental in easing the panic."

Bernanke turned the Fed "into the role of a daring, financial first-responder and as an active market participant, rather than limiting the institution to its traditional role of controlling the money supply," Zuckerman maintains.

The Fed hasn't been able to wind down its easing program yet, "for good reason," he opines.

"The U.S. economy in the four years since the recession began has been growing at about half the rate of any other recovery since World War II."

The full impact of Bernanke's policies won't be known for years. "But this much we do know: The Fed under Ben Bernanke was instrumental in saving the country from financial catastrophe," he stresses.

"The president's mean-spirited dismissal of perhaps the greatest central banker in American history is another indication of an administration that has no clue how serious the country's current economic condition is."

As for the speculation over who will succeed Bernanke, insiders see it as a two-person race between Obama's former economic adviser Lawrence Summers and Fed Vice Chairwoman Janet Yellen.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did



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