Is Bernanke Calling it Quits?

Federal Reserve Chairman Ben Bernanke
Alex Brandon/APFederal Reserve Chairman Ben Bernanke, right.

WASHINGTON -- Ben Bernanke is intensifying speculation that this year will be his last as Federal Reserve chairman by deciding to skip the Fed's annual August conference in Jackson Hole, Wyo.

Jackson Hole has long been a high-profile platform for speeches by Fed chairmen. Since taking over the Fed in 2006, Bernanke has been the marquee speaker each year. In 2010, he used his speech to signal that the Fed could launch another bond-buying program. Stock prices jumped in response to his remarks.

His second four-year term will end in January, and neither he nor President Barack Obama has signaled whether Bernanke will serve a third term.

The Jackson Hole retreat, sponsored by the Federal Reserve Bank of Kansas City, will be held Aug. 22-24. A Fed spokesman said Monday that Bernanke won't attend because of a "personal scheduling conflict." He didn't elaborate.

Tim Duy, an economics professor at the University of Oregon and author of the FedWatch blog, said Bernanke's decision suggests that he'll leave the Fed in January.

"I wonder if that indicates what we all believe," Duy said.

All eyes at the conference will likely instead focus on the Fed's vice chair, Janet Yellen, who is widely considered the front-runner to succeed Bernanke. Yellen, who previously led the San Francisco Fed, was appointed vice chair by Obama. Yellen has been a vocal supporter of Bernanke's low interest rate policies, and her selection would suggest that the Fed would continue those policies.

And if Yellen is the keynote speaker at Jackson Hole this year, "that would just confirm her front-runner status," said Zach Pandl, an economist at Columbia Management, an asset management firm.

Pandl said it's even possible Bernanke could inform the White House of his intention to leave, and Obama could publicly tap Yellen to succeed him, before Jackson Hole.

About 140 central bankers, economists, academics and government officials attend the annual conference, which is in its 37th year. In 2010, Bernanke used his speech to list the Fed's options for stimulating a weak economy, including a second round of Fed bond purchases to try to keep borrowing costs low. That was the approach Bernanke eventually announced two months later.

Several of Bernanke's comments this year have caused observers to speculate that he is ready to leave after eight grueling years, which included the financial crisis and Great Recession, and likely resume teaching at Princeton University.

Asked at a news conference last month about his plans, Bernanke said, "I don't think that I'm the only person in the world who can manage the exit" from the Fed's record-low-rate policies and $3 trillion in bond holdings. The Fed has vastly expanded its portfolio through bond purchases intended to keep rates low to encourage borrowing, spending and investing.

In congressional testimony in February, the normally circumspect Bernanke flashed impatience over criticism that the Fed under his leadership has escalated the risk of high inflation. Responding to a question from Sen. Bob Corker, a Tennessee Republican, Bernanke said, "None of the things you said are accurate."

"He didn't sound like someone who wanted to stick around in the job much longer," Duy said.

This year's Jackson Hole conference will occur as even some members of the Fed's policy committee are pushing to end its $85 billion-a-month in bond purchases, which began last year. That pressure could intensify by the time of the Jackson Hole conference, particularly if the economy has strengthened.

Bernanke said in December that the Fed would continue buying Treasury securities and mortgage-backed bonds until substantial progress was made in reducing unemployment. The unemployment rate remains a still-high 7.6 percent.

Assuming he does leave in January, Bernanke's absence from Jackson Hole would contrast with the 2005 conference, the last one before Alan Greenspan ended his 18-year tenure as Fed chief. That conference featured numerous encomiums to Greenspan's achievements at the Fed. Two years later, the financial crisis pushed the country into the worst recession since the Great Depression.

"In hindsight," Pandi said, "it looks like the participants at the 2005 Jackson Hole conference missed the elephant in the room, which was the growing credit bubble and instability in the financial system."

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love the bernankes

April 24 2013 at 11:42 AM Report abuse rate up rate down Reply

I wondered when he announced that he might reduce the bond buying if he knew something we didn't know. Like that economists are predicting rampant inflation due to $3 trillion in fiat money pumped into our economy. Like knowing that the fiat money is the only thing propping up the stock market and that it would correct itself to much lower levels if he quit pumping fiat money into the economy. For years he's been suggesting continued buying of bonds with fiat money until the unemployment rate got close to 6%. Now, suddenly, they're not only suggesting reducing the rate of fiat money creation but that he is quitting. This rate of inflation at 1.8% annually doesn't really reflect the increased cost of living the average American is experiencing.

This is reminiscent of Chris Dodd and Barney Frank defending the housing boom up until the collapse. Then Chris Dodd and Barney Frank writing the faux banking reform bill and then both dropping out of Congress. They want to get out of Dodge before the posse comes after them.

April 23 2013 at 6:15 PM Report abuse rate up rate down Reply

Well it looks like Bernanke could not fight the negative effects of Obamacare on employment by printing money. Just like the Fed in 1937 could not fight the effects of Social Security passed in 1936. These social programs might be "noble" in their purpose, but cannot be rammed on a struggling economy. Did anyone in Washington ever hear of "moderation". I guess it takes brains to figure it out. A high IQ does not equate with wisdom which requires experience which this administration does not possess.

April 23 2013 at 5:20 PM Report abuse +1 rate up rate down Reply
Rap Scallion

Now the inflation bomb will go off! It has been a long time coming and will hit most folks, who that the world was really rosy, like a runaway beer truck!

Again the rich do not care, and the poor are not effected.....the middle will stretch and possibly break this time around!

This administration is no friend of the middle class, or capitalism in general!

April 23 2013 at 3:49 PM Report abuse +3 rate up rate down Reply

Does the House have a say in who succeeds Bernanke? If they do, we're finished! The rich feel that the country's out of the woods financially. After all, they're doing allright. They could care less if the bond buying stops and inflation soars. They can afford it.

April 23 2013 at 3:14 PM Report abuse -1 rate up rate down Reply
1 reply to boowah's comment

Federal Reserve board of governors and their chairman are picked by the President.

April 23 2013 at 6:18 PM Report abuse rate up rate down Reply

The major take-away point is that in 2005 all these eminent economists and bankers failed to see the approaching elephant--the credit collapse from sub-prime and collateralized junk securities.

The second point, about Bernanke going to Princeton to teach, is to emphasize the old adage, "If you can't do, teach!""

April 23 2013 at 3:09 PM Report abuse +2 rate up rate down Reply
old timer

He sure knows how to print money. he should get a job at one of the newspper

April 23 2013 at 2:45 PM Report abuse +3 rate up rate down Reply

One can only hope !

April 23 2013 at 2:37 PM Report abuse +2 rate up rate down Reply

Gee maybe he can call Barack up and get him to quit too.

April 23 2013 at 2:33 PM Report abuse +1 rate up rate down Reply

I guess Ben doesn't want to be the one Obama blames when his house of cards that's holding up US debt collapses.

April 23 2013 at 1:41 PM Report abuse +4 rate up rate down Reply
1 reply to Stanley's comment
Rap Scallion

Oh......He will be blamed for all of the Obama Administrations financial problems.....Jobs, economy. soon to be inflation, he will take it all!

April 23 2013 at 3:51 PM Report abuse +3 rate up rate down Reply