Remember September 2008? The month when the entire U.S. financial system almost collapsed? Ever since that pivotal moment, one person has been in the crosshairs, making decision after decision that has impacted nearly every American alive today.
That person is Federal Reserve Chairman Ben Bernanke. Because of his monumental influence on the world’s most important economy, Bernanke has been named TIME magazine’s 2009 Person of the Year.
TIME Managing Editor Richard Stengel called the Federal Reserve “the most powerful, least understood government force shaping our lives” as he revealed his magazine’s choice live on TODAY Wednesday morning.
“He was the great scholar of the Depression who saw another depression coming, and did everything he could to stop it,” Stengel said of Bernanke. “He's a controversial figure. He’s a Republican appointed by a Democratic president. It’s a really interesting combination of factors.”
How about Steve Jobs? Barack Obama?
The decision to name Bernanke Person of the Year followed weeks of debate and discussion among TIME editors and staff members. Here are others TIME considered for the distinction:
- TIME’s No. 2 runner-up after Bernanke was Gen. Stanley McChrystal, commander of U.S. forces in Afghanistan. Stengel told TODAY’s Matt Lauer and Meredith Vieira that McChrystal came “very close” to usurping Bernanke’s Person of the Year cover: “He really was the prime mover behind the change in Afghanistan strategy.”
- No. 3: The Chinese worker — an acknowledgement of an increasingly influential group of people in one of the world’s most powerful economies.
- No. 4: Nancy Pelosi, U.S. Speaker of the House.
- No. 5: Usain Bolt, Jamaican sprinter and Olympic gold medalist.
- Other contenders included Steve Jobs, co-founder and chief executive of Apple Inc., and President Barack Obama, who was named Person of the Year in 2008. “Obama could be Person of the Year every year, but not this year,” Stengel commented.
In the end, it was Bernanke’s sway over a global financial crisis that touched millions — if not billions — of lives that led to TIME’s decision. “He is influencing how the economy operates,” Stengel explained.
(Interestingly, more than 16,000 TODAYshow.com readers voted on their picks for Person of the Year and made decidedly different decisions. Readers’ top choice was Steve Jobs, who garnered 44 percent of the vote; the second pick was President Obama, who got 20 percent. Bernanke received backing from 3.2 percent of readers who participated.)
‘Very, very close to a depression’
The Person of the Year designation comes at a time when Bernanke, 56, is reeling from criticism on all sides and defending his record at the Federal Reserve — not to mention his very job. Earlier this month, he had to appear at a Senate hearing about his nomination to a second four-year term. A Senate committee will vote on his nomination on Thursday, one day before TIME’s Person of the Year edition hits newsstands.
“Ben approached a financial system on the verge of collapse with calm and wisdom, with bold action and out-of-the-box thinking that has helped put the brakes on our economic free fall,” Obama said at the time.
Bernanke’s confirmation appears to be secure, but it’s being debated as mistrust of the Federal Reserve approaches an all-time high. Rep. Ron Paul, R-Texas — author of a best-selling book called “End the Fed” — is part of a movement on Capitol Hill to rein in the central bank and subject its monetary policy to congressional audits. (Bernanke, who has long argued for the Fed to be more open and transparent, fears such audits could mire the Fed’s setting of interest rates in politics.)
Slideshow: Time Persons of the Year 1999-2011 The Fed chairman also has taken plenty of lumps because one of his key steps to stem the financial crisis — using taxpayer money to bail out distressed banks — is wildly unpopular with the general public. The perception is that Bernanke chose to lend a hand to fat cats on Wall Street while ordinary workers had to keep enduring one body blow after another.
Bernanke addresses that issue at length in TIME magazine. Here is an excerpt from the article:
“Bernanke also knows the economy would be much, much worse if the Fed had not taken such extreme measures to stop the panic. There’s a vast difference between 10 percent and 25 percent unemployment, between anemic and negative growth. He wishes Americans understood that he helped save the irresponsible giants of Wall Street only to protect ordinary folks on Main Street. He knows better than anyone how financial crises spiral into global disasters, how the grass gets crushed when elephants fall. ‘We came very, very close to a depression ... The markets were in anaphylactic shock,’ he told TIME during one of three extended interviews. ‘I’m not happy with where we are, but it’s a lot better than where we could be. ... Of course, there were things we could have done better, but this was a perfect storm.’ ”
‘I’m frustrated too’
In addition to rescuing private companies that were failing, Bernanke slashed a key lending rate to nearly zero, printed new dollars to keep the economy moving, and took other steps to prevent credit markets from drying up completely.
It all amounted to improvising and trying new things quickly — something Bernanke knew a timid and passive Fed had failed to do during the Depression of the 1930s. He actually spent his early career as an economist studying the Depression’s origins, and his writings on the subject have brought him considerable respect in his field.
For years, Bernanke has been known as quiet and thoughtful, brainy and bright. After graduating from high school as valedictorian with a near-perfect SAT score — 1,590 out of 1,600 — he kept racking up academic accolades: an undergraduate degree in economics (summa cum laude) from Harvard; a doctorate in economics from the Massachusetts Institute of Technology; professorships at Stanford, New York University, MIT and Princeton. He served as chairman of Princeton’s Economics Department from 1996 to 2002.
In fact, his career had been so solidly centered in academia that some were stunned when then-President George W. Bush tapped him to replace Alan Greenspan as Fed chairman in 2006. (Bernanke did serve as a Fed governor from 2002 to 2005.)
But in the final analysis, the professor helped guide the country out of recession and toward a tenuous recovery. He knows much pain remains for millions of American workers. The unemployment rate is in the double digits, credit is tighter than it should be, incomes are stagnant and home foreclosures continue to rise.
“I understand why people are frustrated. I’m frustrated too,” Bernanke told TIME. “I’m not one of those people who look at this as some kind of video game. I come from Main Street, from a small town that’s really depressed. This is all very real to me.”
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