Who’s next to run the Fed?
The short answer is, Ben Bernanke. He is the Fed’s intellectual center, its public face, and chief architect of its innovative policy initiatives. Conventional wisdom is that if he wants to continue as Chair when his term expires in 2014, the job is his.
There are good reasons to have him continue on the job. For one thing, overseeing our sick economy’s transition from ICU to hospital to outpatient care is going to be a touchy business. With his policy of increased transparency and aggressive public relations, Bernanke is well-positioned to interpret the Fed to the world. Also, having been there through the crisis, he likely knows what undocumented danger-zones exist—where the “bodies are buried.”
But there’s a reason to be concerned about a third term for the Chairman. It’s called “key person” risk, and it’s the risk that an institution becomes dependent upon one critical individual to drive results. Volker led a fractious Fed; Greenspan gradually presided over a personality cult; Bernanke started out trying to build a collegial, consensual culture, but the institution demands a singular leader.
So I think it’s time for a change. There are dozens of well-qualified candidates in the wings. And it would be better for Ben to leave while things are getting better.
Douglas R. Tengdin, CFA
Chief Investment Officer
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