By Ben White
Washington Post Staff Writer
Tuesday, November 15, 2005
In the early 1970s, when college for many meant antiwar protests and experimenting with recreational drugs, friends say Ben S. Bernanke was busy at Harvard and MIT trying to figure out the monetary causes of the Great Depression.
Now the shy, bearded, 51-year-old academic is President Bush's nominee for chairman of the Federal Reserve, anointed successor to celebrated central banker and cultural icon Alan Greenspan.
The public will get its first extended look at the little-known Bernanke today, when he sits for questions from members of the Senate Banking Committee at his one-day confirmation hearing. If confirmed, Bernanke will take over the Fed at a moment of rising economic unease. The U.S. trade and budget deficits are soaring. The once-blistering housing market may be cooling. Rumors continue to rumble through Wall Street of dangerously overextended hedge funds ripe for collapse. The next Fed chairman could face significant challenges, as Greenspan did, within months of taking office.
Bernanke's friends, colleagues and former students say the would-be Fed chairman is likely to come across in the hearing as anything but a starchy academic wedded to arcane theories and rigid economic models.
Instead, they describe Bernanke as a supple thinker and a deceptively shrewd politician with a deadpan wit, a deeply calming bedside manner and no strident political or economic ideology.
Those traits came in handy during his years as chairman of Princeton University's economics department. Bernanke took over a bickering department in 1996 and turned it into a smoothly running machine now often mentioned as one of the top two or three in the nation. Colleagues said Bernanke always knew where each faculty member stood on any issue before a department meeting, something also said to be true of Greenspan at the Fed, an institution that seeks to operate by consensus.
Yet, while reminiscing about his years as department head, Bernanke did not take the position -- or himself -- too seriously. "I served seven years as the chair of the Princeton economics department," Bernanke recalled in a January speech, "where I had responsibility for major policy decisions, such as whether to serve bagels or doughnuts at the department coffee hour."Auspicious Youth
Ben Shalom Bernanke was born Dec. 13, 1953, in Augusta, Ga., and grew up in Dillon, S.C., a small farming and furniture manufacturing community just over the North Carolina border. His mother, Edna, was a substitute teacher. His father, Philip, was a pharmacist at the Jay Bee Drug Co., a store founded by Philip's father, Jonas, who moved to South Carolina from New York in search of a quieter life.
Edna Bernanke said she noticed early that her eldest son had a knack for numbers and an apparent fondness for currency. "We came home one time, and he was playing with pennies with someone," Bernanke said of her 3-year old son. "He could add and subtract. You'd say, 'What if I had nine pennies and I take away three?' and he'd tell you right away."
Bernanke won the state spelling bee at 11, demonstrating the gentle persuasion that friends say he will bring to the Fed. At the state competition, Bernanke was told he misspelled a word. He left the stage. But he was sure he was right. "He came back on stage and said he'd spelled it correctly," Edna Bernanke said. "And he was right."
Bernanke finished 26th at the national spelling bee in Washington, dropping out on the word "edelweiss." Edna Bernanke said her son faltered because he had not yet seen "The Sound of Music," which popularized the word. "We didn't have too many movies in Dillon," she said.
In high school, Bernanke scored 1,590 on his SAT, a near-perfect score. He taught himself calculus as a senior because his school did not offer the course, and he became a speed reader. But Bernanke didn't spend all his time in the library -- his high school afternoons were divided between band practice (he played the saxophone, as did Greenspan) or shooting hoops with friends in his back yard. The schools in Dillon were just starting to integrate, and the young Bernanke drafted a novel about top white and black football players coming together to form a team at a new high school.
Kenneth Manning, a friend a few years older than Bernanke, won a scholarship to Harvard University. Manning, now a science professor at Massachusetts Institute of Technology, lobbied Bernanke's parents to let their son join him in Cambridge. Manning spent hours convincing Edna and Philip Bernanke that Ben would not get swept up in turbulent campus protests or lose his connection to Judaism.
"They were apprehensive. They really wanted him too close to home," Manning said. "But I thought his staying in South Carolina [for college] would be an absolute waste. And I think he was glad to have me say that to them. I remember a two- or three-hour conversation with them about how their son would not be corrupted."
Bernanke did not become an activist when he arrived at Harvard in 1971, just a voracious student, said Manning. Bernanke also worked a variety of jobs during his college breaks, including one summer as a waiter at South of the Border, the sprawling cathedral of kitsch just off I-95 in South Carolina, famous for endless billboard advertisements featuring sombrero-clad cartoon pitchman "Pedro."
Bernanke considered English and mathematics as majors at Harvard before turning to economics. Friends say the fact that Bernanke considered majoring in English reflects his love of language, a skill not always associated with the often opaque Greenspan.
"Greenspan's been head of the Fed so long that the markets have gotten to sort of understand the language. They speak Greenspanese," said professor Alan S. Blinder, a former Fed vice chairman and frequent lunch partner of Bernanke's at Princeton's economics department. "Oddly enough, while Bernanke will speak English, which is a much more commonly understood language, I think the markets are going to have some adjusting to do when the English starts coming out."
As a graduate student at MIT, Bernanke probed the roots of the Depression, studying the Fed's role and what he viewed as its failure to fight a dangerous downward spiral in prices. He also nurtured his fascination with baseball statistics and his new love for the Boston Red Sox. Bernanke, now an avid Washington Nationals fan, has said he missed classes at MIT in 1975 because he was busy following the Red Sox in the World Series.
After MIT, Bernanke moved to California with his new wife, Anna, and his MIT colleague Jeremy I. Bulow. Bulow and Bernanke taught at Stanford University while Anna, now a Spanish instructor at the National Cathedral School, studied for her master's. The three lived in a rented house with economist Mark Gertler, a close friend of Bernanke's and now a professor at New York University. Anna Bernanke did the cooking. None of them had any money.
"I lent him $500, and he really did not like being in debt," Bulow recalled of their first year in California. "I think he paid me back by the second paycheck, which is maybe a good characteristic for someone running the Fed."
The group house, while convivial, was hardly party central. "As economists go, he's well above average," Bulow said of Bernanke's social habits. But such a distinction, Bulow cautioned, is "a bit like saying a guy is the best surfer in Topeka."
Friends and colleagues say that unlike Greenspan, Bernanke will probably not be a fixture on the Washington social circuit, preferring quiet nights at home and small gatherings of friends and family. But they say he is not so introverted that he will fail to develop close, private relationships with key members of Congress and at the White House.
Bernanke quickly emerged as a top teacher at Stanford, earning six-plus scores on his evaluations on a seven-point scale, besting professors with 20 years of experience. He continued to draw high marks as a teacher after moving to Princeton in 1985 but eventually gravitated toward administrative duties as chair of the economics department.
Many professors blanch at the idea of serving as department chairman, an often thankless task requiring fierce lobbying of school administrators for resources and deft ego massage of faculty members. "You've got 50 prima donnas and no stick to hit them with, so you just try to persuade them and hope they fall in line," said Gene M. Grossman, a Princeton economist and former chairman of the department.
Colleagues, including Blinder, said they had little feel for Bernanke's personal politics beyond the general sense that he supported lower taxes. And even though Bernanke did not display any overt ambition to go to Washington, colleagues noted, his outside activities appeared to suggest such a desire. "He always seemed enormously publicly spirited," said Andrew B. Abel, a University of Pennsylvania economist and co-author with Bernanke of a leading macroeconomics textbook.
That public spirit was tested in the 1990s, when Bernanke served two elected terms as a member of the school board in Montgomery Township, N.J., a farming area that at the time was quickly transforming into a bedroom community for ambitious professionals.
Bernanke, joined a board in tumult in 1994. Area schools faced a looming space crunch as younger families crowded in. Public school board meetings often devolved into screaming matches between anti-tax advocates and pro-spending parents. "We had a fistfight break out outside one of the meetings," said Jamie Savedoff, former superintendent of the district.
Bernanke's six years on the school board highlighted his emphasis on analysis over ideology. Dwight Jaffee, a former Princeton colleague, said Bernanke would often talk about the rancorous board debates while the pair walked to their regular squash game. "He would look at the numbers and make computations about whether it made sense to build new schools, Jaffee said. "He really has faith in doing the numbers right and then living with them."
In 2000, and despite his preference for lower taxes, Bernanke provided the tie-breaking fifth vote on a bond issue that raised area property taxes by about $334. "Ben recognized that if we didn't take that action, by the time all the new kids arrived, we wouldn't have space for them," Savedoff said. The student population in Montgomery Township jumped to 5,100 this year from around 3,100 in 2000. The township opened a new high school in September.Bernanke in Washington
In 2002, Bernanke took leave from Princeton and traveled south to Washington for a new job as a Federal Reserve governor, and three years later would become chairman of President Bush's council of economic advisers. Abel, Bernanke's co-author, cited his colleague's editorship of the high-profile American Economic Review, his chairmanship at Princeton and service on the school board as preparation for a Washington career. "Then I think when the opportunity came his way to serve as a Fed governor, he realized he was pretty good at it. And his career is studying monetary policy, which makes him the perfect person for the job."
Economist Chris Sims, one of the stars Bernanke recruited to Princeton, said unlike some other chairmen, Bernanke always clearly stated his goals and then sketched a plan to get there, taking the mystery out of departmental operations. That demystification, Sims and others said, is likely to be the key difference between the Bernanke Fed and Greenspan Fed.
What will not change, friends and colleagues say, is the occasional wry joke emanating from the Fed chairman's office.
Gertler recalled comments Bernanke made at Gertler's 1990 wedding to economist Cara Lown. "He stood up and gave a toast and congratulated me for marrying inside the faith. He didn't mean Judaism. He meant the faith of monetary economists."
Staff writer Nell Henderson and staff researcher Richard Drezen contributed to this report.