Tags: Ben Bernanke | speech | Federal Reserve | dinner

NYT: Bernanke Is Minting Millions on the Lecture Circuit

By    |   Wednesday, 21 May 2014 03:11 PM

Ben Bernanke is cashing in.

The former civil servant and head of the Federal Reserve now makes anywhere from $200,000 to $400,000 per speech to the kinds of folks he used to regulate — as much or more than his former government salary in a single appearance, The New York Times reported.

In 2014, Bernanke is expected to make millions of dollars from speaking engagements, providing his insights to bankers and corporate leaders from Houston to Abu Dhabi.

Editor's Note:
38 Trades That Could Turn $1,000 Into $49,000


"Investors are dealing with an economy that is in large part the creature of Fed policies under Mr. Bernanke, and they are willing to pay top dollar for his words of wisdom as a result," The Times noted.

Bernanke is not exactly blazing a new path. His predecessor, Alan Greenspan, and plenty of former policymakers have taken the same lecture circuit path.

Are his audiences getting their money's worth?

UBS and Goldman Sachs — neither exactly known for their thrifty ways — apparently do not think so. The Times reported both too-big-to-fail banks decided Bernanke's fees are too high.

But at least one attendee would apparently disagree.

David Tepper, founder of the $20 billion hedge fund Appaloosa Management, was at an exclusive dinner at New York's posh Le Bernardin restaurant where Bernanke spoke, and later expressed regret he did not trade on Bernanke's guidance there.

"He gave this stuff out, but I didn't realize what he was saying at the time, so I didn't do a great trade," Tepper said, according to The Times, of the dinner for the hedge fund elite.

Michael Novogratz, a principal of Fortress Investment Group who also attended the Le Bernardin dinner, said Bernanke "gave credence to the idea that the Fed believed in lower potential GDP and lower potential inflation," The Times reported.

"I think that got through to the market and that was kind of the accelerator of this giant trade in fixed income that has happened," Novogratz said, referring to an unexpected 2014 rally in government bonds that has been highly profitable for some investors.

At least one Fed governor expects there is unfinished business to clean up from Bernanke's stint as head of the U.S. central bank.

Charles Prosser, Philadelphia Fed president and one of the more hawkish governors, believes that $2.5 trillion in "excess" reserves held at the Fed amount to a bomb waiting to go off, MarketWatch reported. Those reserves are available as loans to individual or corporate borrowers through the nation's banks.

The Fed created the reserves through its massive asset purchases of U.S. Treasurys and mortgage-backed securities, a long-running stimulus strategy of quantitative easing that is Bernanke's legacy.

Those reserves could pour the equivalent of gasoline into a fire if banking lending picks up, creating inflation, Prosser cautioned.

MarketWatch said the concern is that if the reserves are drawn down quickly, the Fed could be forced to raise interest rates faster and earlier than it would like and perhaps pull the punch bowl away from the economic recovery.

Business Insider offered the opinion that if Bernanke's remarks to private audiences are still moving markets, perhaps the U.S. now has a "shadow Fed chair, who's still conducting monetary policy, in secret meetings with wealthy investors."

Editor's Note: 38 Trades That Could Turn $1,000 Into $49,000

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Ben Bernanke is cashing in. The former civil servant and head of the Federal Reserve now makes anywhere from $200,000 to $400,000 per speech to the kinds of folks he used to regulate — as much or more than his former government salary in a single appearance, The New York Times reported.
Ben Bernanke, speech, Federal Reserve, dinner
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2014-11-21
Wednesday, 21 May 2014 03:11 PM
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