The chairman of the Federal Reserve made a rare, and possibly a first-ever, appearance at a military base last week. While the state goal is to help servicemembers learn financial literacy, the event had the makings of a political stump speech at a time when the Fed is under increasing pressure from members of both parties.
Ben Bernanke awoke early to greet soldiers returning from Iraq at 3 a.m. Later he held a town hall meeting with military families at Fort Bliss, near El Paso, Texas.
“I’m here because the men and women in military service, like all Americans, are profoundly affected by the economic challenges our nation has faced these past several years,” said Bernanke, according to a press release by the Army. “You may have family members who have had trouble finding employment in a tough job market. You may be worried about your own job prospects when the time comes for you to leave the military.”
The timing and location of the event have some wondering whether there may be other, more political reasons for Bernanke’s trip. Bernanke and the Fed have come under fire from Democrats for failing to do more to prevent the economic crisis of 2008, and members of both parties have criticized the Fed for its role in bailing out large financial institutions during the subsequent crash.
Critics in Texas have been particularly strident. Rick Perry, the state’s Republican governor who is running for president, said at a recent campaign stop that the Fed’s use of monetary policy to help the economy was “treasonous.” Ron Paul, the Libertarian Congressman from Galveston, Texas, regularly calls for the Federal Reserve to be abolished entirely.
Allan Meltzer, a political economy professor at Carnegie Mellon University who researches the history of the Fed, says he has never heard of a Fed chairman addressing a military audience.
“Bernanke has been under pressure not only from candidates but from Congress,” Meltzer told Fox News. “In the past, he has gone on TV. That was a first. And he now runs a news conference…Are these efforts to increase ‘openness’ or responses to political criticism, or both? How can one tell?”
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In his remarks, Bernanke seemed to suggest that politics may have played some role in the planning of the event. The Fed and the Treasury Department came under harsh attack this summer as the leaders of both agencies pushed Congress to raise the debt ceiling and prevent the U.S. from defaulting on its obligations. Many Republicans in Congress accused Bernanke and Treasury chief Timothy Geithner of overstating the negative effects of default.
“We were very concerned about the debate in July and August about the federal debt ceiling,” Bernanke told the troops. “This was a very negative event. We could see that consumer confidence dropped quite significantly in August, and I think part of it had to do with this question about how well our government is doing what it needs to be doing.”
Bernanke did address financial issues of specific concern to troops. He encouraged soldiers to enroll in college using benefits from the G.I. Bill, and told them about rules banning banks from increasing interest rates on mortgages while soldiers are deployed.
The Fed chief also said he empathizes with soldiers’ financial concerns.
“The economy is still far from where we’d like it to be,” Bernanke told the troops. “And many of you are impatient and worried, and I fully understand that.”
Image: Bryan Gatchell, IMCOM, U.S. Army