A Tougher Tone at the Top; Bernanke Answers Critics with Assertiveness
When Ben S. Bernanke became Federal Reserve chairman two years ago, he set out to be the man in the gray flannel suit -- more anonymous bureaucrat than swashbuckling master of the economy.</br></br>After months of criticism from people on Wall Street who argue that Bernanke has responded timidly to the crisis in the housing and credit markets, he has taken a more assertive approach. Last week, he gave a speech that used bold language to signal that Fed would cut interest rates to try to prevent a severe economic downturn. On Thursday, he told Congress how to design a stimulus package that would offer immediate help.</br></br>The two moves are meant to assure financial markets, elected officials and the American public that the Fed is on the case.</br></br>"The financial markets and the whole society are crying out for leadership," said Alan S. Blinder, a Princeton economist and former Fed vice chairman. "Bernanke as a person and the Fed as an institution are the places this leadership can come from."</br></br>It is all but inevitable, in the view of Fed leaders, that the economy will grow slowly in the first half of 2008. There may even be a mild recession, they say. But Bernanke is trying to indicate that he and his colleagues at the central bank will not let a painful, self-reinforcing cycle set in that could cause a severe and prolonged downturn.