The idea of Fed chairman Bernanke at a town hall meeting being covered by PBS made some Washington observers shudder. Others just assumed that Bernanke wanted to take a victory lap around the country to celebrate the end of a recession that many economists believe he was critical in halting.
One or two members of the press had the effrontery to say that Bernanke was trying to draw attention to himself and the fine job he has done because the President will make a decision about who will run the Fed starting in January. These people are assuming that Bernanke is “campaigning” for the job, as if he needed to after his remarkable actions of the last year.
No one could have imagined when the news came out that Bernanke was barnstorming on public television that an influential Gallup poll would show that Americans trust the Fed less than any other agency among nine that were part of questions put to 1,018 people from July 10-12. Only 30% of those asked said the Fed was doing an “excellent or good” job. The figure was 53% when Alan Greenspan was chief in 2003. His star has fallen considerably since then which makes the results of the survey about the Fed’s role today even more shocking.
Bernanke is the face of the Fed and has appeared to millions of people who have watched his testimony before Congress or have read his comments about the economy in the media. The results of the survey have to be particularly shattering to Bernanke because, while there were two Presidents during the financial crisis and two Treasury Secretaries, there was only one Fed chair. The public appears to regard the Fed’s role in the credit market catastrophe completely differently from most professional economists, financial writers, and financial executives.
Bernanke’s real problem may have very little to do with the job that he did. It is likely caused by the fact that the public has never understood what the Federal Reserve does. The responsibilities of the Federal Reserve have always been more difficult to fathom than those of the Defense Department for example. It is hard for most American citizens to comprehend the complex concepts of the setting of interest rates and the regulation of the money supply. The Fed had to change its role during the crisis in order to play a more aggressive part in the financial markets than it had in the past, since there was no other governmental organization that could save large financial companies quickly. This transformation in the Fed’s role, accompanied by an increase in its power, caused many citizens to be more confused about what the Fed was supposed to do.
The agency most highly regarded among those listed in the Gallup poll was the Center for Disease Control and Prevention, which is not surprising. The typical citizen believes that the CDC protects him from deadly diseases like the swine flu, malaria, and cholera. The organization is a watchful angel charged with keeping Americans healthy. It is no wonder that the FDA also does well in the poll.
The two agencies most widely regarded as doing an “excellent or good” jobs after the CDC are NASA and the FBI. NASA would naturally rank high on the list. It was built by people like John Glenn and Neil Armstrong and others who had the “right stuff.” This month marks the 40th anniversary of man’s first walk on the moon.
As anyone who has watched the new film “Public Enemies” knows, J Edgar Hoover’s FBI rid the nation of dangerous criminals like Pretty Boy Floyd and John Dillinger in the 19030s and communists in the 1950s and early 1960s. The agency has protected the country from harm ever since. The CIA is rated nearly has high as the FBI, probably for many of the same reasons.
The only surprise in the poll is that that the IRS was rated higher than the Fed. There is no explanation for that at all unless it is a fear among those questioned that if they spoke poorly of the Internal Revenue Service, even in private, that they would be audited within an inch of their lives.
Bernanke may have the misfortune to be the face of the organization blamed by the general populace for the great economic collapse of 2008/2009 even though in reality he was instrumental in saving the system. President Bush is gone. President Obama was elected when the unrelenting recession was well under way. Henry Paulson was a sinister Treasury Secretary, but many members of the public view his successor, Tim Geithner, as a bumbler who cannot even fix the car industry correctly. That leaves Bernanke as the only figure who has been in his office from the beginning of the demise of the financial system until today.
Bernanke’s conspicuous presentations of his role in the financial world are most likely designed to get him reappointed. They may end up as an effort to reshape the current perception of both the Fed and its chairman’s role in the year long battle to prevent the destruction of the capitalist system.
Douglas A. McIntyre
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