There have been few times in recent memory when the financial market has been quite as embattled as in the last five years. The Great Recession, followed up by the Not-So-Great Recovery, have created a jagged policy landscape and a great many questions about who should have prevented the crisis, who should have done more to fight it, and upon whose shoulders the blame should ultimately fall. It's in times exactly like these that the Federal Reserve, usually a semi-hidden independent player in the field of Washington politics, assumes a role of greater and greater importance as the agency in charge of setting what is known as monetary policy, the ebb and flow of money and its real and perceived value in the modern economy.
A strong leader (or chairman), then, is what we need in the Federal Reserve, perhaps a professional economist, Ivy-educated, from a less-affluent past and with an impressive resume to boot. The ideal candidate would be a past member of the Federal Reserve Board of Directors (the chairman's lieutenants, so to speak), perhaps someone who's served in the public sector throughout the financial crisis; being one of the top published economists in the world is a given. The man that best fits this description? None other than Ben S. Bernanke, the incumbent chairman of the Federal Reserve since 2006 and the guiding hand behind the government's response to the Great Recession.
That is not to say Bernanke is perfect, by any means; he is a controversial figure for a reason. First and foremost among those reasons is an event that is outside his control, namely the financial crisis of 2008 (out of his control only because financial crises are far more than two years in the making, the length of his term up until that point) and, more importantly, his response (and thereby the Fed's response) to the crisis, something that was definitely in his control and has incited a great amount of scrutiny over the last few years.
Bernanke was among the lead advocates of a policy known as "quantitative easing," an economic practice by which the government, directed by the Fed, injects money into the economy to give people and companies more spending power. However, Bernanke's role in the days and months after the crisis in the midst of this quantitative easing cycle were heavily criticized. The policy itself is quite controversial; many Republicans and libertarians preferred a more hands-off approach by the government, especially in light of the enormous budget deficit (a problem that Bernanke, whatever else he has done, has increased during his term as Chairman for better or worse).
Bernanke also directed a large amount of the money to large companies, beginning a chain of bailouts of companies that were "Too Big To Fail" (not literally, of course, as they were indeed failing, but rather a directive of prevention because if they failed, the U.S. economy could get dragged down as well). His so-called shoring up of Wall Street while many ordinary Americans suffered dire hardships drew harsh calls of elitism and wrongly-directed aid, though Bernanke argues back that without this shoring up the very economy would have collapsed, thereby injuring far more Americans. This direct, state-led intervention in the private sector, preventing what could alternately be called a healthy breakdown of overgrown corporations and a return to good business practices or the meltdown of large economic engines and the loss of millions of jobs drew increased fire from conservatives and moderates as well, controversy that only increased once a few new pieces of information came out.
Among those pieces of information were his roles in the merger of Bank of America and Merrill Lynch, and his role in the highly controversial role in the bailout of insurance supergiant AIG. He was actually cited as a perpetrator of fraud and indirect extortion during his term in a letter by then-Attorney-General of New York Andrew Cuomo. Cuomo alleged that CEO Ken Lewis, the head of Bank of America, was not apprised of the true debt held by Merrill Lynch, and once he wanted to call off the merger, was threatened with replacement by Bernanke and former Treasury Secretary Henry Paulson. These eventually led to congressional hearings, where Bernanke denied the charges; however, the suspicions remained well into the current debate. His staff also revealed that he had been highly cautioned against bailing out AIG, which he described at the time as a necessary evil, but which has been seen as less and less necessary as time has gone on. Then again, as they say, hindsight is 20/20.
Bernanke is certainly under fire now, with talks running hotly about his successor rather than a continuance of his tenure. Some of the controversy is certainly partisan, with greater Republican calls for his replacement (despite his professed Republican views), though in the last confirmation vote for chairman, 18 Republicans and 11 Democrats voted against him, a not-quite-significant difference. A part of the controversy, too, is personal, with his ambiguous role in some mergers on Wall Street and his decision to overwhelmingly bail out Wall Street. Many even distrust him for failing to foresee the current economic crisis; after all, though it is incredibly hard to foresee a collapse, it is his job as the nation's foremost economist. He is even criticized for his decision to lower interest rates to almost zero, a decision that helped the economy grow, but almost certainly created an unstable foundation of credit and could prove more harmful in the long run.
The economy and jobless rate show less improvement than any American likes to see, though it is just as easy to argue that Bernanke averted a Great Depression; certainly, it could have been a lot worse. There are reasons to criticize Bernanke (partisan, political, personal, economic) and reasons to support him (partisan and economic, but also experience and credentials) but the decision, in the end, is the public's, the government's, and yours.
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