WASHINGTON, 25 October 2005 — President George W. Bush named top White House economic adviser Ben Bernanke as chairman of the Federal Reserve Board yesterday to succeed the near-legendary Alan Greenspan.
“The decisions of the Fed affects the lives and livelihood of all Americans,” Bush said at the White House as Bernanke and Greenspan looked on. He said his choice “commands deep respect in the financial community.”
It was the third time in as many years the president has turned to the 51-year-old Bernanke for a sensitive post. Bush named him to the Fed board in 2002, then made him chairman of the president’s Council of Economic Advisers earlier this year.
The appointment is subject to Senate confirmation, and Bush called for swift action.
“If I am confirmed by the Senate I will do everything in my power, in collaboration with by Fed colleagues to help assure the continued prosperity and stability of the American economy,” said Bernanke, a Harvard educated economist.
“My first priority will be to maintain continuing with the policy and policy strategies under the Greenspan era,” Bernanke added.
Greenspan, who became chairman in 1987, completes his term as chairman on Jan. 31. By naming a successor more than three months in advance, Bush appeared to be trying to clear the path for a smooth transition.
Whatever the Senate’s reaction, Wall Street liked what it heard. Stocks rose as word of Bernanke’s appointment circulated in advance of the presidential announcement.
“Over the course of a career marked by great accomplishment, Ben has done path-breaking work in the field of monetary policy, taught advanced economics at some of our top universities, and served with distinction on the Fed’s Board of Governors,” Bush said.
Bernanke has “earned a reputation for intellectual rigor and integrity,” Bush said. “He commands deep respect in the global financial community. And he will be an outstanding chairman of the Federal Reserve.”
Bush praised Greenspan, as well. “For nearly two decades, Chairman Greenspan has shepherded our economy through its highs and its lows. Under his steady chairmanship, the United States economy has come through a stock market crash, financial crises, from Mexico to Asia, two recessions, corporate scandals, and shocks ranging from devastating natural disasters to a terrorist attack in the heart of America’s financial center,” he said.
Greenspan, who is serving his fifth chairman as chairman of the Federal Reserve Board and has been named to the post by presidents of both parties, did not speak. It was a rarity in Washington that signaled the imminent shift in power over delicate issues such as interest rates. For two decades, it was Greenspan’s pronouncements, opaque and otherwise, that counted most within government and on Wall Street.
While Bernanke pledged continuity with his predecessor’s policies, the two men differ on whether the Fed should set targets for inflation - Bernanke thinks it should, Greenspan does not. Otherwise they share a similar philosophy, so much so that while the younger man was at the Fed, market observers often looked at his speeches for insight into Greenspan’s thinking.
Bernanke has a reputation as a straight-talking economist and a Republican who avoids telegraphing any ideology.
In June 2005, Bernanke was sworn in as chairman of the President’s Council of Economic Advisers. He had served as a member of the board of governors of the Fed since August 2002.