10/24/05:
President Bush Chooses Ben Bernanke To Succeed Alan Greenspan
As Chairman Of The Federal Reserve
SUSIE GHARIB. President Bush today named Ben
Bernanke to succeed Alan Greenspan as the chairman of the
Federal Reserve. He’s currently the president’s
chief economic advisor and before that, had served as a Fed
governor under Greenspan. Darren Gersh reports.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: There
were to be no surprises with this nomination. The president
stressed his pick for Fed chairman will reassure markets around
the world.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Ben Bernanke
is the right man to build on the record Alan Greenspan has
established.
GERSH: The President said it would not be easy to replace
a legend and Bernanke agreed.
BEN BERNANKE, WHITE HOUSE CHIEF ECONOMIC ADVISOR: If I am
confirmed to his position, my first priority will be maintain
continuity with the policies and policy strategies established
during Greenspan years.
GERSH: Some analysts believe Bernanke’s first challenge
as chairman will be confronting rising energy prices and growing
inflationary pressures. And though Bernanke seemed relatively
optimistic on the outlook, when he testified before Congress
last week.
BERNANKE: The stability in core inflation and inflation expectations
does suggest that overall inflation is likely to return to
levels consistent with price stability in coming quarters.
GERSH: As an economics professor, Bernanke helped develop
the idea that the Fed should aim for a specific inflation
target. The theory is, if markets know where the Fed wants
to go, they will adjust market interest rates to help the
Fed get there. But not everyone agrees inflation targeting
is a good idea. Ed Baney is the former president of the Federal
Reserve Bank of Philadelphia. He says the new chairman may
find inflation targeting ties his hands too tightly.
ED BANEY, FORMER PRESIDENT OF THE FEDERAL RESERVE BANK OF
PHILADELPHIA: All economic models are over simplifications
of reality and chairmen have to deal with the reality and
that means that they need - they need flexibility.
GERSH: As a Fed governor, Bernanke pushed for greater transparency.
Analysts expect as chairman, Bernanke would run a Fed that
is more open and easier to understand, although it may not
be easier to predict. Darren Gersh, NIGHTLY BUSINESS REPORT,
Washington.
10/24/05: John
Lipsky, Vice Chairman of JPMorgan, On The Bernanke Nomination
SUSIE GHARIB: Earlier today I spoke with John Lipsky, vice
chairman of JPMorgan, and asked him if Bernanke is a good
choice to lead the Fed.
JOHN LIPSKY, VICE CHAIRMAN OF JP MORGAN: Well, of course,
but happily, of all the prominently named candidates, all
of them seem to be of high level of competence. Obviously
this position is taken very seriously.
GHARIB: John, there is a lot of market strategists who I
talked to today are saying that they would have preferred
that Bernanke was less of an academic and had more Wall Street
experience. How important is that?
LIPSKY: In the event, it’s hard to tell. After all,
remember when Alan Greenspan was named, there were plenty
of critical comments that he lacked the monetary policy experience,
etcetera. Ben Bernanke has been - served at the Fed. He understands
the issues that face the Fed and the kind of choices that
they have to make.
GHARIB: Now there’s this perception that Bernanke won’t
be as tough of an inflation fighter as Alan Greenspan has
been. What are your thoughts on that?
LIPSKY: Oh, I don’t think there’s any evidence
to suggest anything of the sort. After all, Ben Bernanke has
been a proponent of formal inflation targeting, not giving
the Fed the kind of leeway, at least conceptual leeway, that
others might have wanted.
GHARIB: Given that Bernanke has been the chief economic advisor
for President Bush, do you think that he will be able to operate
at the Fed truly without influence from the White House?
LIPSKY: The important thing here is that it’s actually
clear that this Federal Reserve will continue to focus on
price stability as their principal goal. After all, this is
one of the interesting aspects, not only for the Fed, but
for central banks around the world.
GHARIB: So between now and January 31st, the last meeting
for Alan Greenspan at the Fed, who do you think the markets
are going to be listening to?
LIPSKY: Certainly, Ben Bernanke is going to have to get used
to the idea that his every word is going to be scrutinized.
There’s no time off, but this will be an interesting
point of management. Who is going to be speaking? My guess
is he will refrain from the kind of commentary that could
cause confusion. I’m sure he’s going to defer
to the chairman until the time comes for him to assume the
mantle.
GHARIB: John, thank you very much.
LIPSKY: Thank you.
10/24/05: Market Summary
SUSIE GHARIB: Wall Street greeted news of the Bernanke nomination
with a powerful broad based rally. The Dow surged almost 170
points, its biggest gain in six months. The NASDAQ jumped
33 and the S&P 500 added 19 points. Over at the New York
Mercantile Exchange, traders were more focused on hurricane
Wilma. The storm pounded south Florida, but steered well clear
of oil production facilities in the Gulf of Mexico. In New
York trading, December crude futures fell $0.31 to $60.32
a barrel. Now speaking of Wilma, as the hurricane swept across
Florida, it also shut down our television production facilities.
As a result, we are unable to bring you our regular broadcast
and detailed market coverage.
GHARIB: That wraps up our hurricane shortened look at today’s
top business stories.
Nightly
Business Report transcripts are available on-line post broadcast.
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are their own and do not necessarily represent the views of
Community Television Foundation of South Florida, Inc. Nightly
Business Report, or WPBT. Information presented on Nightly
Business Report is not and should not be considered as investment
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