Ben Bernanke is exceptionally polite. In “The Courage to Act,” a 624-page memoir released this week, Mr. Bernanke, the former Federal Reserve chairman, describes the presidents and Treasury secretaries he worked with in deeply respectful, not-particularly-revealing terms. It’s hardly the gossipy, blunt assessments that can turn a high official’s memoir into juicy reading.
But precisely because of this fact, Mr. Bernanke’s occasional tough criticisms — of people like his hawkish Fed colleague Thomas Hoenig and the senator and presidential candidate Bernie Sanders — stand out as revelatory about the man who guided the United States economy through its most perilous period in modern times. He shows impatience with the messy maw of democracy, implicitly contrasting the bombast of many politicians with the orderly, thoughtful decision-making that was taking place inside the Bernanke Fed.
The broad themes and many factual details in Mr. Bernanke’s book have been told before. His book comes out well after the memoirs of two close partners in the era of crisis-fighting, Hank Paulson and Tim Geithner, and the narrative of the 2007 to 2009 crisis has been told in multiple journalistic accounts and an HBO movie. In terms of economic philosophy and rationale for his actions, Mr. Bernanke presented those in a series of lectures in 2013 that were themselves collected in a short book.
But even as someone who covered intensively the events Mr. Bernanke retells and who has read all those previous books (and wrote one of them), I found the book to be worthwhile reading. It’s just not for the usual reasons one reads a senior government official’s memoir. If the basic narrative of what happened during the crisis and what the Bernanke Fed was thinking is already well established, the book sheds light on many of the smaller dramas that hang over this crucial period of world economic history.
Which brings us back to Bernie Sanders and Tom Hoenig.
A recurring theme in the book is Mr. Bernanke’s frustration with dissenters — colleagues at the Fed who disagreed with central bank interventionism, especially when that disagreement was logged publicly. Beneath the surface of these pages is an appreciation for those who play an inside game of behind-closed-doors debate, and disdain for those who fight their policy battles in a more strident, ideological, public way.
In August 2008, just before the Lehman Brothers collapse would send the global economy into a tailspin, Mr. Bernanke was primarily worried about financial stability and possible recession. But many of his Fed colleagues were more focused on soaring energy prices and the risks of high inflation, and therefore wanted tighter money.
“I find myself conciliating holders of the unreasonable opinion that we should be tightening even as the economy and financial system are in a precarious position and inflation/commodity pressures appear to be easing,” Mr. Bernanke wrote in an email to his vice chairman, Donald Kohn. It had the subject line of “WWGD,” meaning “What would Greenspan do?”
“Too many dissents, I worried, could undermine our credibility,” Mr. Bernanke writes in his book.
Two years later, as the Fed weighed a second round of its controversial program of quantitative easing, known as QE2, he became particularly irritated at how Mr. Hoenig, then the president of the Kansas City Fed, waged a public campaign against the effort.
After a “Businessweek” profile, Mr. Hoenig “appeared to be enjoying the attention,” Mr. Bernanke writes. “I respected his right to dissent, to ask public questions, and to publicly explain his stance. But now I thought he risked undermining public confidence in the Fed and disrupting the committee’s deliberative process by staking out inflexible positions before hearing other committee members’ views.”
Mr. Bernanke’s comments about political leaders show similar disdain, particularly those on the ideological ends of both parties, describing the efforts on Fed transparency from Mr. Sanders of Vermont and the former representative Ron Paul of Texas in parallel terms.
“Senator Bernie Sanders of Vermont, a self-described socialist who caucused with Democrats, seemed to see the world as a vast conspiracy of big corporations and the wealthy,” he writes, adding parenthetically, “Corporations and the wealthy have lots of power, certainly, but in the real world most bad things happen because of ignorance, incompetence, or bad luck, not as a result of grand conspiracies.”
If anything, he is more disdainful of the political shifts in his own party. “It seemed to me that the crisis had helped to radicalize large parts of the Republican Party,” he writes.
He repeatedly expresses disdain for the hypocrisy of members of Congress. When his confirmation for a second term as Fed chairman was in doubt in January 2010, he was “disturbed” while working the phones with senators who were weighing their vote and indicated they supported him but couldn’t vote for confirmation. “The callers seemed to believe that voting in opposition to their personal views for political reasons was perfectly natural,” he writes. He quotes one senator as saying “sometimes you just have throw some red meat to the knuckle-draggers.”
By contrast, when Mr. Bernanke writes of people he disagreed with at times but who played an inside game — fighting those battles quietly in meetings in conference rooms within government buildings — he holds his fire.
If you parse Mr. Bernanke’s words carefully and know some back story, you can discern how he disagreed with Larry Summers, when he was an Obama White House official, over the wisdom of nationalizing troubled banks, or with the European Central Bank president Jean-Claude Trichet over the wisdom of fiscal austerity in 2010. But they earn none of the open annoyance he levels at his rivals who lodged more public campaigns.
Mr. Bernanke was a career academic who ventured into the center of the world’s most powerful democracy and seems frequently appalled by what he saw.
“A dose of populism is healthy for any democracy,” Mr. Bernanke writes. “But in extreme forms, on either the left or the right, populism can also lead to cynical manipulation of legitimate public anger and to contempt for facts and logical argument. When these aspects of populism dominate political discourse, good governance is nearly impossible.”