Bernanke tours pastry factory, in a sign to Main Street
PHILADELPHIA -- Ben S. Bernanke is one of the world's leading historians of monetary theory. Now, he also knows how they make Tastykakes.
While the European economy teetered and Congress considered fundamental changes in financial regulation, Bernanke, the Federal Reserve chairman, made his way to Philadelphia for a conference on community development. He toured a shipyard, as well as the Tasty Baking Co., which makes plastic-wrapped cupcakes and other pastries commonly purchased at convenience stores.
Bernanke's appearance at a Federal Reserve Bank of Philadelphia conference and his visit to businesses in the redeveloped Philadelphia Navy Yard were part of an effort by the Fed chairman to gather information about economic trends from beyond the Beltway -- and to show the public that he is focused on the performance of institutions beyond big banks.
The message: I care about Main Street.
His comments did not give any new insights on his thinking about the economy or Fed policy, but he did acknowledge that problems in the banking sector have stood in the way of economic recovery among small businesses, and he said the Fed is trying to shape its regulatory approach to address that situation.
"Unlike the largest firms, small firms are dependent on banks one way or another to get their financing," Bernanke said. "As they expand, those limits on bank lending are going to become more of a binding constraint, more of a problem."
Indeed, dealing with the lack of funding for small firms is a key to decreasing joblessness, he argued.
"We have a very high unemployment rate and need to get that down," Bernanke said in an onstage question-and-answer session. "One of the keys is going to be overcoming the constraints on credit that small businesses are facing."
Besides the substance of his comments, Bernanke's appearance signaled something else for the Fed: The creeping return to normalcy. Since the financial system began its near-meltdown almost three years ago, Bernanke's trips outside Washington have been dedicated almost exclusively to high-profile speeches or public appearances.
He has had less time to meet with small businesses and community groups, nor has he engaged in the kind of photo-ops more common to politicians running for office than Fed chairmen.
On Thursday, Bernanke was led around Tasty Baking's manufacturing facility, quietly observing giant lines of machines that produce thousands of cupcakes a day. Charles Pizzi, president of the company and also chairman of the Philadelphia Fed, explained Tasty Baking's 96-year history and how the machines work.
Workers wearing hairnets stared quizzically as a dozen photographers climbed over one another for a shot of Bernanke looking at the machinery.
At another stop, Lothar Budike, the president of a start-up company called Light-Pod, which is creating a more efficient lighting system for Navy vessels, explained how one of the advantages of his product is that it lasts longer than current lights -- a plus on an aircraft carrier, where changing bulbs is not always an easy matter.
"How many sailors does it take to screw in a light bulb?" Bernanke quipped.
"That's better than jokes about economists," retorted Charles Plosser, president of the Philadelphia Fed.
"Be careful, there's a lot of Navy guys around here," added Peter Longstreth, president of the Philadelphia Industrial Development Corp.
The road trip seemed a welcome break for Bernanke, who has spent the past week developing a response to the European crisis -- the Fed reinstituted a swap program to central banks overseas -- and trying to advance the Fed's views in the debate over financial regulation in the Senate.
"I had an extraordinary time" on the tour of the Navy Yard, he said during the Q&A session. "The best time I've had in a while."