Time Magazine has named Fed Chairman Ben Bernanke its Person of the Year 2009, just days before the Senate Banking Committee votes on his renomination. The timing, while probably not deliberate, is interesting. According to one Research 2000 poll, 47% of Americans think Bernanke cares more about Wall Street than Main Street. The Atlantic has details:
One of the main complaints is that Bernanke has been too friendly to banks under the government’s bailout regime. According to a new poll, Americans agree. 47 percent of respondents said Bernanke cares more about Wall Street; 20 percent said he cares more about “Main Street”; 33 percent weren’t sure. The poll was commissioned by the Progressive Campaign Change Committee.
The question simplifies a central concept of the bank bailouts: that too-big-to-fail institutions on Wall Street are so integral to the functioning of the entire economy that they must be rescued, despite irresponsible behavior, in order to save the rest of us. In other words, the government was forced to tend to to Wall Street in order to save Main Street.
It is, however, an important question in politics. The administration can’t be seen as too friendly to Wall Street as it carries out the overarching economic rescue–otherwise it will face a backlash of venomous public opposition to financial institutions and a mistrust of the government as it deals with them.
For perception’s sake, Bernanke was named Person of the Year at an ideal time. In its cover story, Time refers to Bernanke as a “mild-mannered economic overlord.” Here’s why they claim to have chosen him:
Bernanke didn’t just learn from history; he wrote it himself and was damned if he was going to repeat it. Bernanke decided to do the opposite of what the Fed did back in the ’30s: he would loosen the money supply as far as it would go, he would save as many banks as he could, and he wasnt going to hector the American public about pulling up their socks.
As Bernanke said when we interviewed him this month, he did not see the crisis coming, and he probably did not react as fast as he should have reacted. His defense against the criticism that he rescued bloated banks and their overpaid execs is that the system itself is the problem: no bank should be too big to fail, but when it is, the alternative to saving it is destroying the livelihood of millions. There is an enormous difference between the financial system and the economy, but if the financial system fails, it takes the economy down with it.
In reality, Time also picked Bernanke as a way to stir up controversy–and sales. MarketWatch has more:
The magazine’s managing editor, Richard Stengel, has delighted in previous years to stir the pot, even if it makes people angry. He is doing his job.
Time, like many other prestigious publishing war horses, has had trouble proving it remains relevant here in the digital age. The best way to remind people that you’re still around is to do something that makes them think.
It does matter, though. The fact that the media have reacted this morning shows that Time still has some vitality left.
It also can’t hurt that Time’s parent company, Time Warner, has close ties with the Obama administration. Former Time Warner CEO Richard Parsons, now Chairman of Citigroup, served on Obama’s economic advisory team.
So what does Time’s Person of the Year pick mean? Time gets publicity. Bernanke wins a better public perception. Readers, meanwhile, are quietly primed to like Bernanke, approve of the Fed, and avoid questioning Time’s choice.