Former Federal Reserve chairman Ben BernankeRachel Idzerda/The Globe and Mail
In the midst of a hectic day promoting his new memoir, Ben Bernanke decides he needs a respite from his heavy schedule of public appearances and media interviews. So he cancels one of his morning TV commitments and turns our planned lunch into a 25-minute chat in the lobby of a trendy boutique hotel in downtown Toronto.
Most questions tossed at the former Federal Reserve chairman focus on his central, and at times controversial, role during the critical period in late 2008 and early 2009 when the global financial system teetered on the edge of the abyss. That, after all, forms the heart of his book, whose title, The Courage to Act, tells us exactly what he thinks of the job he did steering the world's most powerful central bank through the worst financial and economic storms since the Great Depression.
Mr. Bernanke typically fields even the hardball questions with equanimity, offering articulate, measured responses. One question for which he has no ready answer, though, is why no senior decision makers at the major Wall Street investment houses, commercial banks or credit-rating agencies have faced criminal charges over their roles in the Great Financial Collapse.
"I was puzzled by the Department of Justice's prosecution strategy, which was to go after corporations. So you had large banks paying multibillion-dollar fines."
He has said elsewhere that some people should have faced justice. "Obviously, a lot of people made mistakes and took excessive risks," he tells me. "But in order to determine legal culpability, you have to do the investigation. It depends on the circumstances. I don't know to what extent they investigated individual culpability and I don't know what the outcome of that would have been. But it would have been interesting to know more about what happened."
Mr. Bernanke, who turns 62 on Dec. 13, doesn't appear fatigued as he sits back and sips a Diet Coke. He wears a dark grey suit, white shirt and red print tie, having left behind the preferred casual garb of the university professor for the more formal attire of the Washington elite when he was first appointed to the Federal Reserve Board in 2002.
He describes his role then as "a junior member of the Maestro's orchestra," referring to the title once bestowed on Alan Greenspan for his seemingly deft handling of recessions, bubbles and currency crises during his 18-year tenure as chairman. (Mr. Greenspan's reputation was tarnished by the crisis, when he admitted to being shocked that bankers and traders would behave so badly.)
When Mr. Bernanke replaced him in 2006, he opted for the more open, collegial style of his six years as chairman of Princeton's economics department. He also pushed for greater transparency and clearer explanations of Fed intentions and concerns, determined to end what he called "a Marcel Marceau communications strategy." He even appeared on CBS's 60 Minutes, taking the viewing public around his small southern hometown of Dillon, S.C. (pop. about 6,700).
That was where the self-described nerdy, bookish youth developed two interests that have stayed with him through the years – baseball and math. In fact, as he explains, they were intimately connected.
As a member of one of the small number of Jewish families in the town, where his father and uncle ran the pharmacy started by his paternal grandfather in 1941, young Ben Shalom Bernanke didn't get to participate in a large part of the community's social life that was centred on church activities. Instead, he whiled away warm summer evenings playing Strat-O-Matic baseball with a like-minded friend. The popular dice game simulates hitting and pitching statistics compiled by real players.
"It was a way of understanding probability and using it as a way of modelling a certain kind of phenomenon," Mr. Bernanke says. "In economics, you use probabilistic or statistical models to model the economy, and in Strat-O-Matic, you use random numbers and probability to model the baseball game."
It should come as no surprise that the future star economic thinker would soon find the game too limited and design a more complicated version with additional variables.
He hasn't played the game since those early teen years. "I think I've outgrown it," he says with a laugh. "I like to follow the real thing. When I was a kid, I lived in a place that was hundreds of miles away [from a Major League team]."
As a student at Harvard and later MIT, Mr. Bernanke cheered for the local team, the Boston Red Sox. But he switched allegiance to the Washington Nationals, which were known as the Montreal Expos before relocating to the U.S. capital in 2005.
At times during the crisis, the Fed chief would take in the occasional game to relax. But he often had to leave his seat to return phone calls. While he was observing batting practice one September day in 2012, Washington outfielder Jayson Werth asked: "So what's the scoop on quantitative easing?"
Today, he gets to see most games without urgent interruptions or financial questions from multimillionaire ball players.
Since leaving the Fed in early 2014, Mr. Bernanke has won plaudits from many fellow economists and key policy makers.
It was good fortune, they say, that one of the world's leading scholars of the monetary policy failures of the 1930s Depression was on the job to prevent a rerun of that devastating era. They credit his rapid deployment of unorthodox weapons, including near-zero interest rates and massive bond purchases, with keeping the crisis from morphing into something infinitely worse, particularly after Congress balked at further economic stimulus measures of their own.
But the Bernanke Fed's bold response didn't please everyone. A persistent band of critics, including austerity preachers who think occasional destructive downturns are good for the soul, gold-loving investors and populists philosophically opposed to central bank intervention, argue that the Fed's unprecedented easing has fuelled dangerous asset bubbles, punished savers and inevitably will unleash a torrent of inflation.
The fact they have been wrong, at least about inflation, for seven years and counting doesn't seem to deter them.
"The intensity of the opposition seems to have eased a bit as the economy has improved and some of the concerns that some politicians had about the Fed policy have not been realized," Mr. Bernanke says. "That being said, there still is a good deal of political antagonism. You can see it when [his successor] Janet Yellen testifies before Congress. So I think there still are political risks to the Fed's independence."
The Fed ended its bond-buying program last October. And with unemployment at a low 5 per cent and the economy gaining strength, policy setters appear poised to raise interest rates slightly at their next meeting in mid-December, the first hike in nearly a decade.
"Right now, the U.S. economy is moving forward pretty well," Mr. Bernanke says. "Consumer spending has been reasonably strong; housing is improving; durable goods, autos are doing well. Capital investment looks to be strengthening a bit."
The main risks to the rosier picture lie outside the U.S. in the slowing global economy and weakened emerging markets, which the Fed and other central banks have to keep an eye on, he adds. "The problem is that assessing the outlook is very difficult right now. There are a number of forces operating in different directions. And as a result, the appropriate policy path is less than crystal clear."
He seems relieved that others have to make those tough calls now.
It would have been interesting to discover that the person in charge of handling the money for the world's richest economy couldn't balance the household budget. But alas, that is not the case. "I pay the bills and manage the accounts. I try to keep it simple," he says. What he's not so good at is home repairs, which he says he leaves to his wife, Anna, an educator.
One thing he has not done since leaving the Fed is to jump into the market. But he wasn't an investor before coming to Washington. Most of his retirement income resides in the teachers' pension fund account he first opened as a rookie assistant professor in 1979.
But as Mr. Bernanke follows a well-worn path for former leading Washington power players, he also stands to reap big bucks from his writing, speeches and advisory work.
Today, he hangs his suit jacket at the Brookings Institution, a Washington-based think tank. He has joined the lucrative public speakers' circuit and has signed on as a high-priced senior adviser to Pacific Investment Management Co. (Pimco) and hedge fund heavyweight Citadel.
Other than that, he says he leads a fairly quiet life these days, with more time at home with his wife doing crossword puzzles, watching The Big Bang Theory and reading widely. Baseball games remain a preferred pastime, as do movies. A recent favourite: The End of the Tour, about the late author David Foster Wallace. Fittingly, it's about the 1996 book tour for his celebrated novel, Infinite Jest. With his own month-long promotional tour just about over, Mr. Bernanke seems positively wistful as he heads to his next appearance.
BIOGRAPHY
Age: 61
Place of birth: Augusta, Ga.
Education: PhD in economics from MIT; BA in economics from Harvard.
Family: Married for 37 years to Anna. Two grown children.
Guilty pleasure: Sweet desserts. Favourite? Chocolate ice cream.
Most inspirational historical figure: Abraham Lincoln. Kept a Lincoln quote about ignoring congressional attacks on his desk during crisis.
Favourite pastime: Going to baseball games.
Reading: Eclectic, from history, literary fiction and math to Michael Connelly detective novels and Bill James's baseball analysis. "The only thing I don't read very often at home is economics."