Ben Bernanke reports to Congress this week. He’ll deliver the final two-day testimony of his tenure as Chairman of the Federal Reserve. Last time around, some Republicans put Bernanke in the hot seat over concerns about his easy money policies. But Bernanke wasn’t the first Fed Chair to feel the heat.
Tim Duy, director of the Oregon Economic Forum, says people forget the political challenges of past Fed Chairs, like Paul Volcker. Volcker wrung inflation out of the economy by aggressively raising interest rates. That was more painful than popular.
“The normal sources of stress or political interference would be in times when the Federal Reserve was tightening policy, not when they were aggressively easing policy,” Duy says.
That puts a twist on Bernanke’s tenure.
Antulio Bomfim, a former Fed economist, says after the financial crisis, the Fed had to resort to unconventional policies. Like buying large amounts of Treasury debt and mortgage backed securities. That was new.
“That’s something they didn’t do before,” Bomfim says, “And that’s something many people see as controversial and became politicized and still is politicized in some quarters.”
Bomfim thinks Bernanke will reassure Congress the Fed won’t leave the economy in a lurch. Congress might give him a pat on the back or a slap on the wrist -- or both.