RENEE MONTAGNE, host:
Time now for business news. The Senate holds a confirmation hearing today for Ben Bernanke, the man chosen by President Bush to replace Alan Greenspan as chairman of the Federal Reserve. Ben Bernanke is 51 years old. He's an economist from Princeton, and he's expected to be confirmed with little difficulty. NPR's Jack Speer reports.
JACK SPEER reporting:
When President Bush introduced Bernanke to the public last month, the first order of business was to reassure the financial markets. Alan Greenspan might be stepping down after 18 years, but Bernanke made it clear his policies would be staying on.
Mr. BEN BERNANKE (Federal Reserve Chairman Nominee): If I'm confirmed to this position, my first priority will be to maintain continuity with the policies and policy strategies established during the Greenspan years.
SPEER: Greenspan was appointed by President Reagan to take over from another popular Fed chairman, Paul Volcker. Then, as now, the economy seemed to be in relatively good shape. But just three months after Greenspan became chairman of the Federal Reserve, Wall Street suffered its worst single-day point drop ever, a more than 500-point plunge on October 19th, 1987. Allan Meltzer is a professor of political economy at Carnegie Mellon University and a Fed historian. He says that event, along with others, including the Asian financial crisis and the collapse of the hedge fund, Long-Term Capital Management, helped to define the Greenspan era at the Fed.
Professor ALLAN MELTZER (Carnegie Mellon University): He showed how good his judgment was, and that established him along the path that put him where he is now, that is kind of an icon for economics in the American society.
SPEER: Before coming to Washington, Bernanke, a Republican, was chairman of the Economics Department at Princeton. For three years, he was a member of the Fed's board of governors. He now chair's the President's Council of Economic Advisers. Robert Parry is a former Board of Governors' member who served with Bernanke.
Mr. ROBERT PARRY (Former Board of Governors' Member): He is clearly well-prepared, spent a lifetime as a theoretician, as an analyst in the area of monetary policy, so he really comes with the credentials.
SPEER: But that background has also caused some concerns. Critics say Bernanke lacks some of the real-world experience Alan Greenspan brought to the job. Rich Yamarone, chief economist at Argus Research, says whether Bernanke succeeds or fails as Fed chairman will largely hinge on his relationship with the financial markets.
Mr. RICH YAMARONE (Argus Research): Pretty much, the Street's going to dictate whether or not Ben Bernanke stays or goes. It has nothing to do with a president or a Senate confirmation. It has nothing to do with that. It's really whether Wall Street wants it or not, and that's how it's going to go.
SPEER: Still, Yamarone and other observers believe Bernanke is a solid choice, noting there was similar unease 18 years ago when Alan Greenspan was nominated. At his Senate hearing today, Bernanke is likely to be questioned on a variety of issues, including the budget deficit and taxes. He'll also be probed for hints about his views on monetary policy, though he's likely to avoid being too specific. Jack Speer, NPR News, Washington.
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