The term 'Ben Bernanke' is included in the Banking edition of the Financial Dictionary. Get your copy on Amazon in Kindle, Paperback or Audio edition. Check for lowest price here...
Ben Bernanke served as Chairman of the Federal Reserve System’s Board of Governors from February 1, 2006 until January 31, 2014. As the successor to former Chairman Alan Greenspan, Bernanke received his Congressional approval because of his expertise in the failed monetary policies led to the Great Depression and for his ideology of targeting inflation.
Bernanke left many legacies from his eight year term in the office. When the banking and financial crises broke out, he developed many ground breaking and unprecedented Federal Reserve tools to stave off a worldwide financial depression.
Ben Bernanke also took the Fed into unchartered territories with bailouts of global insurance giant AIG (to the tune of $150 billion) and investment bank Bear Stearns. In order to prevent a global banking panic, Bernanke’s Fed chose to loan out $540 billion to the money market funds so they could meet the overwhelming liquidation requests from their customers.
Ben Bernanke expanded his and the Fed’s roles in growing the group’s open market operations after they found lowered interest rates were not enough to close out the destabilizing financial crisis of 2008. He created the infamous American quantitative easing programs and Operation Twist as part of these efforts. Critics constantly accused him of playing with hyperinflationary fire, but Bernanke insisted that the dangers primarily lay in doing too little and not too much to save the economy.
After Ben Bernanke resigned from his important position as Chairman of the Fed at the end of January 2014, his Vice Chair Janet Yellen succeeded him as the new Fed Chairman. Yellen had demonstrated in the past that she agreed with many of his policies. Bernanke then went on to become a member of the Economic Studies Program at Brookings Institute where he was appointed as a Distinguished Fellow in Residence. He is also an affiliate of the Hutchins Center on Fiscal and Monetary Policy. Here he helps to analyze and educate members of the public regarding monetary and fiscal policies.
Ben Bernanke’s efforts to guide monetary policy in the American economy yielded results at a difficult time for the nation. The national debt’s growth had severely limited fiscal policy over the past decade. Bernanke served as the nation’s leading economic expert as the spokesman and public face of the Federal Reserve. His speeches continuously influenced the dollar’s value against other currencies and gold as well as the American stock markets. Many believe that in his time as the Chairman of the Fed, big Ben Bernanke evolved into the most critical single individual in the U.S. and worldwide economies.
Ben Bernanke set a number of records while Chairman of the Fed. Other chairman had only previously used the Fed funds rate to reduce inflation or stop recessions. Ben also utilized this critical national lending rate, employing rate cuts on ten separate occasions from September of 2007 to December of 2008. During this time, he conclusively reduced the interest rate from 5.25% to 0%. When this by itself did not prove sufficient to rebuild liquidity in sinking and panicked banks, Bernanke relaxed banking reserve requirements, reduced the discount borrowing rate, and eventually provided credit to the banks via the discount window, something else that had never been done. This still did not thaw the lending freeze.
Bernanke then developed and launched the TAF Term Auction Facility in December of 2007. With this program, Bernanke and company loaned literally billions of dollars to banks in exchange for their notorious bad debts as collateral for the loans. The TAF turned out to not be so temporary as intended. It expanded until it reached an enormous $1 trillion amount by June of 2008.
As credit markets around the world had frozen up, Bernanke labored with other major central bank heads globally to restore lost liquidity. His contribution to this important effort included increasing the dollar credit swap lines by $180 billion. By injecting trillions of dollars into the U.S. and global economies, Bernanke earned the scornful nickname of “Helicopter Ben” from his detractors who were convinced his proverbial throwing money out of helicopters would lead to national hyperinflation in the end.