Chairman Ben Bernanke shows Fed's independence with Texas trip today
Thursday, November 10, 2011
WASHINGTON -- A town hall meeting with Ben Bernanke and a group of military families discussing family finances wouldn't normally draw much notice.
But for this particular event, the Federal Reserve chairman is venturing into Texas. And those who watch the Fed say the visit sends a message to Bernanke's critics: The Fed is independent and won't be intimidated.
Three months ago, Texas Gov. Rick Perry, who is seeking the Republican presidential nod, had sent a veiled threat: Bernanke would be treated "ugly" in Texas if he continued to pursue ever-lower interest rates -- a policy that Perry and some other critics say is akin to recklessly printing money.
Today, Bernanke is visiting Texas for the first time since then, to a U.S. Army fort in El Paso.
His destination may not be coincidental.
"There has to be a political significance to this trip, given what presidential candidate Perry said about the Fed chairman and about how badly he would be treated in Texas," said David Jones, head of consultant DMJ Advisors and the author of books on the central bank. "The Fed sees Texas as a good place to make a stand to assert the Fed's independence."
The Fed wouldn't say whether the El Paso town hall meeting was planned before or after Perry made his remarks.
Fed officials say only that Fort Bliss was chosen because it has a successful financial literacy program that Bernanke wants to highlight. The town hall meeting is the latest in a series of public outreach efforts Bernanke has made, they say.
Over the past 2 1/2 years, Bernanke has attended a half-dozen informal gatherings in Kansas City, Atlanta, Cleveland and other cities. This week's town hall meeting is his first in Texas.
David Wyss, an economist and former Fed staffer, said the site of today's event was likely influenced not just by Perry's remarks but also by criticism from another Texan seeking the presidency: Rep. Ron Paul, a Republican congressman who favors abolishing the Fed.
"The fact that he is getting a lot of criticism from the two Texas candidates is a good reason to go to Texas," Wyss said.
Perry's remarks about Bernanke drew condemnation, including sharp retorts from former Vice President Dick Cheney, political adviser Karl Rove and other members of President George W. Bush's administration.
Speaking in Iowa in August, Perry had said:
"If this guy prints more money between now and the election, I don't know what y'all would do to him in Iowa, but we would treat him pretty ugly down in Texas."
Perry added that the Fed chairman's policymaking could be viewed as "treasonous."
The Perry campaign declined Tuesday to discuss the governor's previous remarks.
Bernanke, a Republican, served as Bush's chief economist before being chosen in 2006 to lead the Fed. He hasn't responded publicly to Perry's remarks.
On Wednesday, Bernanke made welcoming remarks at a Fed conference in Washington on small business and entrepreneurship.
Bernanke said small businesses are still struggling to get loans more than two years after the recession ended and banks could help them by easing overly tight lending standards. He made no mention of Perry or his trip to Texas.
Last week, Bernanke did address criticism from House Speaker John Boehner and Senate Republican Leader Mitch McConnell. In September, McConnell and Boehner were among four Republican leaders who signed a letter urging Bernanke to refrain from policies that they said could escalate inflation in the future.
When asked at a news conference last week if that letter had breached the Fed's political independence, Bernanke was polite but firm.
"We listen to everyone's input," he said. "We are going to make our decisions based on what's good for the economy, and we're not going to take politics into account."