Roger Altman, chairman of Evercore Partners and former deputy Treasury secretary under President Clinton, told me:
“It seems to me that, since the financial crisis erupted, the Federal Reserve, under Mr. Bernanke’s leadership, has acted boldly, creatively and effectively, and done really quite a heroic job in staving off the near meltdown and steering us towards safety, and now the prospects for recovery, both on the financial side and in the macro economy.”
Of course, not everyone agrees.
Noted economist Henry Kaufman, in his latest book, The Road to Financial Reformation, writes about what he calls Bernanke’s slowness, passivity and initial inaction responding to the looming financial crisis.
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“He is somebody who studied the Great Depression at great length,” Dr. Kaufman said of Bernanke, “but it took him quite a while before he recognized the extraordinary problem in the financial markets. He did not come and meet the problem head-on. He met it belatedly.”
Nonetheless many, including myself, believe taking Bernanke out at such a critical moment would have been a major mistake.
Though Bernanke still needs to be confirmed for his second term, President Obama’s announcement essentially ends debate and speculation about whether Bernanke will be reappointed, thus removing one layer of uncertainty. The market hates uncertainty, and it reacted favorably to the news. The less speculation the better, as far as it is concerned.