Ben Bernanke and the Revolving Door That Leads to Wall Street

Ben Bernanke Former Chairman of the Federal reserve

Ben Bernanke
Former Chairman of the Federal Reserve

By Elaine Magliaro

Surprise! Surprise! Ben Bernanke, the former Chairman of the Federal Reserve, is going to “head down a well-beaten path” that many former federal government workers have headed down before him. As Kristin Cwalinski put it, Bernanke will be “shuffling through the revolving door between Washington’s policy circles and Wall Street’s big money institutions.”

Last Thursday, it was announced that Bernanke will be going to…where else? Wall Street! The former Fed Chair will be “a senior adviser at Citadel.” Citadel, a $25 billion hedge fund, said, “Dr. Bernanke will consult with Citadel teams on developments in monetary policy, financial markets and the global economy.” Ken Griffin, founder and CEO of the hedge fund, said of Bernanke, “He has extraordinary knowledge of the global economy and his insights on monetary policy and the capital markets will be extremely valuable to our team and to our investors.”

New York Times:

It is the latest and most prominent move by a Washington insider through the revolving door into the financial industry. Investors are increasingly looking for guidance on how to navigate an uncertain economic environment in the aftermath of the financial crisis and are willing to pay top dollar to former officials like Mr. Bernanke.

Mr. Bernanke joins a long parade of colleagues and peers to Wall Street and investment firms. After stepping down, Mr. Bernanke’s predecessor, Alan Greenspan, was recruited as a consultant for Deutsche Bank, the bond investment firm Pacific Investment Management Company and the hedge fund Paulson & Company.

Last month, Jeremy C. Stein, a former Fed governor, agreed to join the $20 billion hedge fund BlueMountain Capital Management, where he will advise managers on issues like financial regulation, risk and the implications of the Fed’s monetary policy. Mr. Stein resigned from the Fed last May to return to his tenured professorship at Harvard’s department of economics.

In an interview, Mr. Bernanke said he was sensitive to the public’s anxieties about the “revolving door” between Wall Street and Washington and chose to go to Citadel, in part, because it “is not regulated by the Federal Reserve and I won’t be doing lobbying of any sort.”

Got that? Old Ben won’t be doing “lobbying of any sort.” Oh sure, and bears don’t defecate in the woods!

Bernanke claims that he “joined Citadel in part because it is unregulated by the Federal Reserve and because his role would not involve any lobbying.”

International Business Times (IBT) said that the “Chicago-based Citadel was founded in 1990 and is one of the industry’s largest hedge funds.” According to IBT, Bernanke said “he will receive an annual undisclosed fee, but will not own a stake or receive performance-based bonuses from his role.” Bernanke also said that his assignment at Citadel “is not exclusive and he would be free to take on other consulting positions.”

Cwalinski said that “Fast Money” trader Guy Adami and and a number of other Wall Street watchers were outraged when they heard the news.

Cwalinski:

Adami, however, said this week on Thursday’s Fast Money of Bernanke’s new role: “It’s wrong. It’s wrong on so many levels.”

Bernanke “was a hero for a month, [and now] he’s going to go down as one of the most vilified people of the 21st century. Mark my words,” the trader added.

Adami said, “He shouldn’t have been allowed to leave the Fed, number one. He should have saw [sic] [quantitative easing] through, in my opinion, and for him to go to a place that can take advantage of the information that he has privy to, it’s just wrong.”

Nah! It’s not wrong. It’s just business as usual.

SOURCES

Bernanke’s hedge fund gig ‘wrong on so many levels’: Adami (CNBC)

Ben Bernanke Isn’t the Problem, the System Is the Problem: The former Federal Reserve chair is only the latest top regulator to head through the revolving door to the financial industry. (The Atlantic)

Ben Bernanke Will Work With Citadel, a Hedge Fund, as an Adviser (New York Times)

Former Federal Reserve Chairman Ben Bernanke Joins Citadel Hedge Fund (International Business Times)

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2 Responses to Ben Bernanke and the Revolving Door That Leads to Wall Street

  1. po says:

    yep, nothing will ever change until that changes.

  2. rafflaw says:

    The rich get richer…

Comments are closed.