Why Wall Street Doesn’t Want Ben Bernanke To Leave
Federal Reserve Chairman Ben Bernanke is a frequent whipping boy for Tea Partiers, Congressional Republicans, and a lot of ordinary citizens fed up with a flaccid economy. But Bernanke remains very popular on Wall Street, where traders are starting to worry about who might succeed him.
Bernanke’s second term as Fed chairman expires in January 2014, and the New York Times recently reported that Bernanke is unlikely to seek reappointment to a third term. Even though that’s 15 months away, rumors of Bernanke’s departure may be contributing to a swoon in the stock market. And they’re forcing big Wall Street money-management firms to reevaluate the prospects for stocks if Bernanke is no longer in charge of monetary policy.
Since the 2008 financial meltdown, Bernanke — first appointed by President Bush in 2006 — has aggressively pursued an “easy money” policy based on super-low interest rates and unusual types of monetary stimulus, such as quantitative easing. The Fed’s goal under Bernanke has been to flood the economy with money as a way of encouraging lending, spending and other types of economic activity, and to force investors out of bonds and other safe investments they prefer during anxious times, and back into riskier assets like stocks.