Outgoing Fed Chairman Ben Bernanke deserves nothing less than an A+ for his handling of the economic crisis, says one expert.
Allen Sinai, Chief Global Economist and Strategist, Decision Economics was on BNN this morning to talk about Bernanke, who will, pending Senate approval, be replaced by Janet Yellen in January.
Sinai says Bernanke, between a rock and a hard place, performed exceptionally well during the worst financial crisis in a generation.
“We lucked out as a country because of his special knowledge of the Great Depression and the failure of the banking system, which many of us think is what many of us think is what made it was it really was,” said Sinai. “He came in with that as his mission.”
But Sinai says Bernanke’s term wasn’t just a rote reading from the Great Depression playbook.
“His handling of the crisis was absolutely brilliant with new innovations and new inventions,” said Sinai, who praised Bernanke for the tricky stickhandling that was the handling of an economy in which you could no longer lower interest rates, but had to support the economy and the banking system.
“The banking system is the lifeblood of our economy,” he said. “If that had fully collapsed who knows what would have happened.”
Sinai’s unqualified praise of Bernanke, however, does not extend to the rest of his term as Fed Chair.
“They have not done too good a job in terms of thinking about the future,” he said. “What we are in now, this tapering debate, this is the fourth year in a row where the Federal Reserve’s forecasts have turned out to be too optimistic and they go back to the well. They just haven’t gotten that right.”
Sinai says Bernanke and the Federal Reserve were “very slow at the beginning of his terms to see all the terrible stuff that was going on on the regulatory side, they were much too light on regulation.”
As for the regime change, Sinai believes the transition from Bernanke to Yellen will be seamless.
“They are both, in my view, superstars,” he said.