Happy Anniversary Ben Bernanke, your freshman year at the helm of the Federal Reserve is over, and by all accounts, it has been an auspicious start.
Ben Bernanke’s predecessor was often known as the second-most-powerful man in Washington, but he himself has received no such adulation. As the first new Fed Chairman in 19 years, Bernanke has done a remarkable job heading up the nation's central bank.
No freshman curse, only high marks for the man who was in the inevitable position of following a media-savvy showman like Alan Greenspan. In fact, not only has the new Fed chief managed to avoid a recession, he seems to have engineered what was once considered impossible: a relatively soft-landing in the housing market.
As for Wall Street? No widely-anticipated Bernanke bust. Instead, a bull run that has taken the Dow Jones Industrial average up by more than 1800 points, or 16.5 percent in the past year. Makes one wonder why Greenspan hung around so long after all?
Even the maestro himself praised his successor this week, saying that he has done "quite an extraordinary job." Greenspan then exhaled loudly, I presume. It was no secret that Bernanke was dealt a tough hand by Greenspan, when he took over the central bank. Just 12 months ago, the inflation numbers were ominous, but so too were fears of a collapse in the housing market — a conundrum that seemingly left the new Fed Chairman in a pickle.
But Bernanke burnished his inflation-fighting credentials with unusual aplomb. After ignoring pressure to stop Greenspan's two-year interest rate raising campaign, the new Fed Chairman continued to hike rates three more times. Just as oil prices crested, he put on the brakes. At 5 1/4 percent, the fed funds rate put significant pressure on the housing market — but he didn't push it over the edge.
Indeed, while maestro Greenspan ran Fed policy with the flair of a world-renowned conductor, the markets have embraced the steady, consistent hand that Bernanke has brought to the central bank — fanfare be damned. During his first 12 months on the job volatility in the stock and bond markets has diminished and traders are praising the Bernanke Fed for taking some of the "drama" out of the Fed's statements and deliberations.
By all accounts Professor Bernanke has also fostered a collegial atmosphere at the Fed, one in which opposing voices can be heard, but one with less grandstanding on the part of regional Fed presidents. That's made for fewer short-term trading opportunities in the bond pits, but has led to more clarity for investors overall.
Now as Bernanke embarks on his sophomore year, he is overseeing an economy that is humming — and one that gives him the flexibility to raise interest rates later in the year, if necessary. He has also earned the respect of investors — the only currency that matters when you run a central bank.
Sure, Bernanke may be boring compared with the ubiquitous Greenspan, but if he continues his first-year performance he may go down as one of President Bush's best appointments.
Terry Keenan is anchor of Cashin’ In and is a FOX News Channel business correspondent. Tune in to Cashin' In on Saturdays at 11:30am and find out what you need to know to make your money grow and keep what you already have!