University professors and administrators lauded the appointment of former Princeton economics Prof. Ben Bernanke as Federal Reserve chairman, portraying Bernanke as a scholar of the highest character committed to fundamentally solid policymaking rather than party politics.
President Bush nominated Bernanke on Monday to succeed current chairman Alan Greenspan when he retires at the end of January. Bernanke is currently chairman of the president’s Council of Economic Advisors and former Princeton University economics professor.
Interim University Provost Ned Gramlich, who worked with Bernanke for three years as a member of the Federal Reserve’s Board of Governors, said he was an excellent choice.
“I personally don’t think there is going to be any barrier to Ben’s success,” Gramlich said.
The ongoing debate about Bernanke’s qualifications revolves around ability versus experience. One of the worries associated with Bernanke is his limited experience as a policymaker on the national level. He has only had limited experience with the Federal Open Market Committee, the policymaking arm of the Federal Reserve.
Critics say that even though he has studied models and written about theories in the economic realm, he has no experience working in financial markets or in business. Bernanke is generally considered to lack connections in Washington and on Wall Street.
Gramlich, however, disputed those concerns.
“The routine of the Fed Reserve has been well established, and operating it won’t be any problem even though Ben hasn’t had any experience in financial markets on Wall Street,” Gramlich said. “Even though he doesn’t know everyone on Wall Street, most of his papers study markets, so he understands them very well.”
Bernanke will take over from Greenspan, who is legendary in his handling of the nation’s fiscal policy, at the beginning of February. Gramlich said he doesn’t expect major policy shifts when Bernanke takes over, adding that the biggest challenge Bernanke will face is the nation’s large budget deficit.
“I think personally he can handle the problem as well as anybody else,” he said.
Former University Provost Paul Courant, who now teaches economics and public policy at the University, also voiced his support for Bernanke.
“He is a very able man and very articulate and has spent several years on the Federal Reserve, so only being in academia previously shouldn’t really affect his capability to perform well,” Courant said.
Courant said almost everyone in the economics department is pleased with the decision to go with Bernanke.
Business School Prof. Claes Fornell said Bernanke’s perceived weaknesses are actually strengths.
“The fact of Bernanke only being in academia is actually a very positive aspect, because it will be a fresh person without too many political ties in Washington,” he said.
In contrast with President Bush’s other major nomination – that of Harriet Miers, who yesterday withdrew her bid for the U.S. Supreme Court after failing to win the support of lawmakers from both parties – the bulk of the initial reactions to the appointment of Bernanke both in academia and politics have been highly optimistic outside of the University, with both Republicans and Democrats praising the choice.
“We need a careful, nonideological person who understands that the Federal Reserve’s main job is to fight inflation, and Ben Bernanke seems to fit that bill,” Sen. Charles Schumer (D-New York), the highest-ranking Democrat on the Senate Banking Committee, told The Washington Post on Monday.