How Bernanke Staged a Revolution

By invoking emergency powers, Ben Bernanke has drawn criticism. He has transcended usual limits on the central bank and stretched its legal authority, committing vast sums of taxpayer dollars. (By Kevin Clark -- The Washington Post)
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In recent months, sources said, he has conducted a videoconference every couple of weeks with members of the FOMC, briefing them on the latest Fed programs.

Bernanke has also adjusted the schedule to make all FOMC meetings last two days, instead of alternating between one- and two-day meetings. One-day meetings follow a rigid schedule, leaving little time for more open-ended discussion.

"He tries to bring as much input as possible," said Kansas City Fed President Thomas Hoenig. "He's always been willing to ask questions, accept input and be responsive to that input."

That strategy has paid dividends. At the December meeting, Dallas Fed President Richard Fisher didn't want to cut rates and initially dissented from the decision, sources said. At the last minute, in the spirit of public unanimity, he changed his vote.

A Common Conversation

Leaders of regional Fed banks aren't the only constituency Bernanke has rallied around a set of bold actions. Staff members at the Fed in Washington are known for their high-octane intellects and spirit of political independence. But they also tend to be insular and disinclined to rush into decisions.

One midlevel staffer working on financial rescue issues said recently, "I've been here 20 years, and before the last few months never really dealt with anyone outside this building." One Fed governor, when he began, was expected to go through layers of bureaucracy just to get a daily update on the Treasury bond market; now he calls directly the lower-level staff who monitor those markets.

From the day he became chairman three years ago, Bernanke has tried to make the culture less hierarchical. Senior staff members now commonly refer to governors by first names, instead of addressing them with the title "Governor," as they did previously. (The big boss is still Chairman Bernanke.)

And whereas Greenspan once was briefed before policymaking meetings in ritualistic sessions with staff, Bernanke presides over sessions with more debate and discussion, often involving anyone on the staff with expertise on an issue rather than just top-level directors.

A decade ago, when the Fed wanted to know how it might deal with technical issues created by the government's need for fewer Treasury bonds, a study of the issue took 18 months and involved 73 economists across the Fed system. The result was a 165-page report.

This year, the Fed has made decisions of similar complexity and importance over a single weekend.

The pressure to act fast has, by all accounts, come from Bernanke himself. His relationships with staff members are warm, dating to his days as a Fed governor when he ran the equivalent of faculty seminars to help young economists develop their research. But sources who have been in contact with Fed staffers also say that he has prodded economists and lawyers to move faster and think more creatively to execute new programs being enacted.

The Fed's actions have not gone unquestioned -- its inspector general is reviewing all the programs it has launched under its emergency lending authority, and members of Congress have become increasingly skeptical toward the central bank.