1960s ‘Money Market Men’ Design Their Dream Fed Chair

National Journal

With Federal Reserve Chairman Ben Bernanke’s term set to expire in January, the handicapping of the race to replace him has begun. The Washington Post this morning placed the highest odds on Fed Vice Chair Janet Yellen, former Treasury Secretary Larry Summers and former Fed Vice Chair and current TIAA-CREF CEO Roger Ferguson.

It's an old pastime, a more fanciful version of which The New York Times explored when the term of Fed Chairman William McChesney Martin, Jr., was coming to an end in 1969. The paper interviewed “money market men who work closely with the Federal Reserve” and composed their dream Fed chief. It reads a bit like a child's diary description of a future boyfriend:

    He should be a man of command, capable of winning respect from his staff and fellows and their adherence to common policies. He should be a man of considerable intellectual capacity and achievement, but not necessarily an economist. He should be a representative of no narrow interest, such as agriculture or housing. He should view his 14-year term as a board member as the summit of his career, not as a stepping stone. He should speak softly but carry a big stick.

    In addition, these people say the new chairman should not be wedded to any particular pattern of financial organization but should be capable of adapting to the proliferation of new institutions and money market instruments characteristic of a dynamic and rapidly changing financial community.

In the end, economist Arthur Burns was chosen. 

For what it’s worth, Bernanke has remained mum on his plans, telling a reporter at a March press conference, "I don’t really have any information for you at this juncture.” But, he added, “I don’t think that I’m the only person in the world who can manage the exit” from the easy-money policies the Fed has had in place since the crisis. Bernanke has been Fed chair since 2006 and is widely expected to step down when his term ends.

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