Words can hurt. That's a lesson Ben Bernanke learned not long after being confirmed in January 2006 as the head of the U.S. Federal Reserve. At a Washington dinner a few months later, Bernanke responded to a question from CNBC anchor Maria Bartiromo, who asked whether the media and financial markets were right to think that he had signaled the Fed was done raising interest rates. "He said, flatly, no," she reported on her program at about 3:15 p.m. the following Monday, causing stock prices to drop sharply before the market closed. He called that move a mistake and vowed not to stray from "regular and formal channels" of communication.
Now under increased scrutiny as a result of the global recession, however, the Fed chief saw fit to grant the first television interview since his appointment to 60 Minutes correspondent Scott Pelley. The last time a Fed chair gave a television interview was in 1987 when Alan Greenspan appeared on Meet the Press — an interview that was followed the next week by the largest single-day drop in stock market history. So why Bernanke's change of heart? He responded to that question quite plainly: "It's an extraordinary time. This is a chance for me, I think, to talk to America directly." Speaking with Pelley from the Federal Reserve and his hometown of Dillon, South Carolina, Bernanke said that if markets can be stabilized he expects the recession to come to an end "probably this year." And the possibility of the nation sinking into a second depression? "I think we've gotten past that," he said. Bernanke remains dedicated to the task of recovery, but says that the bailing out of insurance giant AIG still "makes him the angriest and gives him the most angst" because of the poor choices the company has made at the taxpayer's expense. (See pictures of the global financial crisis)
Fast Facts:
• Ben Shalom Bernanke was born on December 13, 1953, in Augusta, Georgia, and raised in South Carolina.
• At 12 years old, Bernanke won the South Carolina state spelling bee, despite being initially told that he had misspelled a word. Bernanke, certain he was right, left the stage anyway. "He came back on stage and said he had spelled it correctly," his mother Edna recalled to the Washington Post. "And he was right." Bernanke was later eliminated at the national bee when he misspelled the word edelweiss.
• Taught himself calculus in high school because his school did not offer the course. He went on to score a 1590 out of 1600 on his SAT. Bernanke also played the alto saxophone.
• Earned a B.A. in economics from Harvard University in 1975. He was given the distinction of having the best undergraduate economics thesis and was named the outstanding senior in the economics department.
• Bernanke and his wife Anna married on May 29, 1978. They have two children.
• In 1979, Bernanke received his economics PhD from MIT and began teaching at Stanford University's Graduate School of Business. Six years later he joined the Princeton faculty as professor of economics and public affairs. In 1996, he was named chairman of Princeton's economics department.
• Served two elected terms as a member of the school board in Montgomery Township, N.J., a position that he cites as being formative to his policy-making experience.
• Became a governor of the Federal Reserve in 2002, taking leave from his position at Princeton.
• Appointed chairman of the President's Council of Economic Advisers in 2005, shortly before being nominated to lead the Fed.
• In February 2009, Travis Jackson, a young banker, bought Bernanke's childhood home in South Carolina in a foreclosure auction. Bernanke's family had sold the home more than 10 years prior, but the latest owners lost the house after falling behind in payments.
Quotes From:
• "To understand the Great Depression is the Holy Grail of macroeconomics."
— from Bernanke's book, Essays on the Great Depression published in 2004.
• "I served seven years as the chair of the Princeton economics department where I had responsibility for major policy decisions, such as whether to serve bagels or doughnuts at the department coffee hour."
— Bernanke during a speech in January 2005. (Washington Post, November 15, 2005)
• If I am confirmed to his position, my first priority will be to maintain continuity with the policies and policy strategies established during the Greenspan years.
— after being nominated to succeed Federal Reserve Chairman Alan Greenspan. (CNNMoney.com, October 24, 2005)
• "At this point, the troubles in the sub-prime sector seem unlikely to seriously spill over to the broader economy or the financial system."
— in a speech on June 5, 2007 just months before the economy and stock market began to tumble as a result of the sub-prime mortgage crisis (New York Times, August 20, 2007)
Quotes About:
• "His French teacher once told me you could put him in a closet, and he would still learn something."
— Bernanke's father Joseph, on his son's early promise. (Newark Star-Ledger, 2002)
• Despite Bernanke's sharp macroeconomic intellect we're afraid that he may not be able to conduct monetary policy with the virtuosity of a maestro.
— despite receiving mostly approval and praise, Bernanke's nomination drew some criticism from Richard Yamarone, director of economic research for Argus Research Corporation, for Bernanke's seeming lack of "real-world" experience. (CNNMoney.com, October 24, 2005)
• "Ben is a champion of transparency in monetary policy, but he also recognizes that there are limits to what we know about the economic forecast and what that means to monetary policy."
— then-New York Federal Reserve chief Tim Geithner, who now heads the U.S. Treasury Department. (BusinessWeek, May 15, 2006)
• "I think Bernanke is in a very difficult situation. Too many bubbles have been going on for too long. The Fed is not really in control of the situation."
— Paul Volcker, Fed chief from 1979 to 1987,
on Bernanke and the Fed's response to the rapidly declining economic situation. (New York Times, January 20, 2008)